If a defined contribution plan participant died after their age 70½ required beginning date, distributions to the designated beneficiary were required to ...
Expecting the 10-Year Rule to be applied similarly to the Five-Year Rule, some commenters who were beneficiaries of participants who died in 2020 (after the participants’ required beginning date) stated that they did not take a 2021 RMD and are unsure whether they are required to take a 2022 RMD. This made clear that designated beneficiaries of participants who died after their required beginning date could not stop receiving distributions and wait until the end of the 10th year to take the entire benefit (which was how the Five‑Year Rule operated for beneficiaries of participants who died prior to their required beginning date). The proposed regulations explicitly state that designated beneficiaries of participants who died after their required beginning date must continue to receive distributions from the defined contribution plan under the At Least as Rapidly method and, further, must receive a full distribution of benefits under the 10-Year Rule. It also applies to a designated beneficiary regardless of whether the beneficiary dies before or after the participant’s required beginning date (which was extended from age 70½ to age 72 by the SECURE Act). Under the Five-Year Rule, the beneficiary was not required to receive any payments in the first four years after death as long as full payment of the benefit was made by the end of the fifth year. However, defined contribution plans could require distributions to occur more quickly than what the IRS rules required.