The Washington Report

July 31, 2024

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While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change after our publication deadline.

Retirement

 

Treasury, IRS Release Updated Guidance on RMDs
On July 19, 2023, the Treasury and Internal Revenue Service (IRS) published final regulations relating to required minimum distributions (RMDs) from qualified plans; Section 403(b) annuity contracts, custodial accounts, and retirement income accounts; individual retirement accounts (IRAs) and annuities; and certain eligible deferred compensation plans. These regulations affect administrators of, and participants in, those plans; owners of IRAs and annuities; employees for whom amounts are contributed to Section 403(b) annuity contracts, custodial accounts, or retirement income accounts; and beneficiaries of those plans, contracts, accounts, and annuities. The final regulations reflect changes made by the SECURE Act and the SECURE 2.0 Act impacting retirement plan participants, IRA owners, and their beneficiaries.

According to the Treasury and IRS, “While certain changes were made in response to comments received on the proposed regulations issued in 2022, the final regulations generally follow those proposed regulations. Specifically, Treasury and IRS reviewed comments suggesting that a beneficiary of an individual who has started required annual distributions should not be required to continue those annual distributions if the remaining account balance is fully distributed within 10 years of the individual’s death as required by the SECURE Act. However, Treasury and IRS determined that the final regulations should retain the provision in the proposed regulations requiring such a beneficiary to continue receiving annual payments.”

On the same day, the Treasury and IRS also separately released proposed regulations and a public hearing notice addressing additional RMD issues under the SECURE 2.0 Act. The new proposed regulations include provisions for which the Treasury and IRS are soliciting public comments.

The final regulations are effective on September 17, 2024. Please refer to the final regulations for applicability dates.

Comments on the proposed regulations are due by September 17, 2024. A public hearing on the proposed regulations has been scheduled for September 25, 2024. Requests to speak and outlines of topics to be discussed at the public hearing must be received by September 17, 2024.

The news release is available here.

The final regulations are available here.

The proposed regulations are available here.

PBGC Releases FY 2023 Projections Report
On July 19, 2023, the Pension Benefit Guaranty Corporation (PBGC) released its Fiscal Year (FY) 2023 Projections Report, which shows an improved financial outlook for both Multiemployer and Single-Employer pension insurance programs. The FY 2023 Projections Report shows that the net position of the PBGC’s Single-Employer Program is expected to grow throughout the 10-year projection period – from $44.6 billion, as of September 30, 2023, to an estimated average of $71.6 billion in 10 years (in 2023 dollars). According to the PBGC, “even under the most extreme downside economic scenarios, the Single-Employer Program does not fall into deficit during the projection period.” The Single-Employer Program covers about 20.6 million participants in about 23,500 pension plans. Projections indicate the Multiemployer Insurance Program, which covers about 11 million participants in about 1,360 plans, is now likely to remain financially sound for more than 40 years. Projected outcomes in this year’s report slightly improved compared to last year.

The news release is available here.

The FY 2023 Projections Report is available here.