Required Minimum Distributions, 58886-58954 [2024-14542]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 89, Number 139 (Friday, July 19, 2024)]
[Rules and Regulations]
[Pages 58886-58954]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14542]



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Vol. 89

Friday,

No. 139

July 19, 2024

Part II





Department of the Treasury





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Internal Revenue Service





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26 CFR Parts 1, 31, and 54





Required Minimum Distributions; Final Rule

Federal Register / Vol. 89 , No. 139 / Friday, July 19, 2024 / Rules 
and Regulations

[[Page 58886]]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1, 31, and 54

[TD 10001]
RIN 1545-BP82


Required Minimum Distributions

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: This document sets forth final regulations relating to 
required minimum distributions from qualified plans; section 403(b) 
annuity contracts, custodial accounts, and retirement income accounts; 
individual retirement accounts and annuities; and certain eligible 
deferred compensation plans. These regulations affect administrators 
of, and participants in, those plans; owners of individual retirement 
accounts 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.

DATES: 
    Effective date: These regulations are effective on September 17, 
2024.
    Applicability date: Amended Sec. Sec.  1.401(a)(9)-1 through 
1.401(a)(9)-9, 1.403(b)-6(e), and 1.408-8 apply for purposes of 
determining required minimum distributions for calendar years beginning 
on or after January 1, 2025. Amended Sec.  1.402(c)-2 applies for 
distributions on or after January 1, 2025. Amended Sec.  54.4974-1 
applies for taxable years beginning on or after January 1, 2025.

FOR FURTHER INFORMATION CONTACT: Brandon M. Ford at (202) 317-6700 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    This document sets forth amendments to the Income Tax Regulations 
(26 CFR part 1) under section 401(a)(9) of the Internal Revenue Code of 
1986 (Code). These regulations address the required minimum 
distribution requirements for plans qualified under section 401(a) and 
update the regulations to reflect the amendments made to section 
401(a)(9) by sections 114 and 401 of the Setting Every Community Up for 
Retirement Enhancement Act of 2019 (SECURE Act), enacted on December 
20, 2019, as Division O of the Further Consolidated Appropriations Act, 
2020, Public Law 116-94, 133 Stat. 2534 (2019) and by various sections 
of the SECURE 2.0 Act of 2022 (SECURE 2.0 Act), enacted on December 29, 
2022, as Division T of the Consolidated Appropriations Act, 2023, 
Public Law 117-328, 136 Stat. 4459 (2022).
    The rules of section 401(a)(9) are adopted by reference in section 
408(a)(6) and (b)(3) for individual retirement accounts and individual 
retirement annuities (collectively, IRAs); section 403(b)(10) for 
annuity contracts, custodial accounts, and retirement income accounts 
described in section 403(b) (section 403(b) plans); and section 
457(d)(2) for eligible deferred compensation plans. The determination 
of the required minimum distribution is also relevant for purposes of 
the related excise tax under section 4974 and the definition of 
eligible rollover distribution in section 402(c). Accordingly, this 
document also sets forth conforming amendments to the Income Tax 
Regulations (26 CFR part 1) under sections 402(c), 403(b), 408, and 
457, and to the Pension Excise Tax Regulations (26 CFR part 54) under 
section 4974.

Section 401(a)(9)--Required Minimum Distributions

    Section 401(a)(9) provides rules for distributions from a qualified 
plan during the life of the employee in section 401(a)(9)(A) and after 
the death of the employee in section 401(a)(9)(B). The rules set forth 
a required beginning date for distributions and identify the period 
over which the employee's entire interest must be distributed.
    Specifically, section 401(a)(9)(A)(ii) provides that the entire 
interest of an employee in a qualified plan must be distributed, 
beginning not later than the employee's required beginning date, in 
accordance with regulations, over the life of the employee or over the 
lives of the employee and a designated beneficiary (or over a period 
not extending beyond the life expectancy of the employee and a 
designated beneficiary). Section 401(a)(9)(B)(i) provides that, if the 
employee dies after distributions have begun, the employee's remaining 
interest must be distributed at least as rapidly as under the 
distribution method used by the employee as of the date of the 
employee's death (referred to in this preamble as the ``at least as 
rapidly'' rule).
    Section 401(a)(9)(B)(ii) and (iii) provides that, if the employee 
dies before required minimum distributions have begun, the employee's 
interest must either be: (1) distributed within 5years after the death 
of the employee; or (2) distributed (in accordance with regulations) 
over the life or life expectancy of the designated beneficiary with the 
distributions generally beginning not later than 1 year after the date 
of the employee's death.
    However, under section 401(a)(9)(B)(iv) (as amended by section 327 
of the SECURE 2.0 Act), a surviving spouse may elect to: (1) be treated 
as if the surviving spouse were the employee for purposes of section 
401(a)(9)(B)(iii)(II); (2) wait until the date the employee would have 
attained the applicable age (as defined in section 401(a)(9)(C)(v)) to 
begin taking required minimum distributions; and (3) have the 
beneficiaries of the surviving spouse be treated as beneficiaries of 
the employee if the surviving spouse dies before distributions to the 
spouse begin.
    Section 401(a)(9)(C)(i) (as amended by section 114 of the SECURE 
Act and further amended by section 107 of the SECURE 2.0 Act) defines 
the required beginning date for an employee (other than a 5-percent 
owner or IRA owner) as April 1 of the calendar year following the later 
of the calendar year in which the employee attains the applicable age 
or the calendar year in which the employee retires. Section 
401(a)(9)(C)(v)(I) provides that in the case of an individual who 
attains age 72 after December 31, 2022, and age 73 before January 1, 
2033, the applicable age is 73. Section 401(a)(9)(C)(v)(II) provides 
that in the case of an individual who attains age 74 after December 31, 
2032, the applicable age is 75. For a 5-percent owner or an IRA owner, 
the required beginning date is April 1 of the calendar year following 
the calendar year in which the individual attains the applicable age, 
even if the individual has not retired.
    Section 401(a)(9)(C)(iii) provides that certain employees who 
commence benefits under a defined benefit plan after the year in which 
they attain age 70\1/2\ must receive an actuarial increase. However, 
section 401(a)(9)(C)(iv) provides that the actuarial increase 
requirement does not apply for a governmental plan or for a church plan 
(as defined in section 401(a)(9)(C)(iv)).
    Section 401(a)(9)(D) provides that (except in the case of a life 
annuity) the life expectancy of an employee and the employee's spouse 
(used to measure the period over which payments must be made) may be 
redetermined, but not more frequently than annually.
    Section 401(a)(9)(E)(i) defines the term designated beneficiary as 
any individual designated as a beneficiary by the employee. Section 
401(a)(9)(E)(ii) (which was added to the Code as part of section 401 of 
the SECURE Act) defines the term eligible designated

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beneficiary, with respect to any employee, as any designated 
beneficiary who, as of the date of the employee's death, is: (1) the 
surviving spouse of the employee; (2) a child of the employee who has 
not reached the age of majority (within the meaning of section 
401(a)(9)(F)); (3) disabled (within the meaning of section 72(m)(7)); 
(4) a chronically ill individual (within the meaning of section 
7702B(c)(2), subject to certain exceptions); or (5) an individual not 
described elsewhere in section 401(a)(9)(E)(ii) who is not more than 10 
years younger than the employee.
    Section 401(a)(9)(E)(iii) provides that, subject to the rule in 
section 401(a)(9)(F), the treatment of an employee's child as an 
eligible designated beneficiary ends when the child attains the age of 
majority and that any remaining interest must be distributed within 10 
years of that date. Section 401(a)(9)(F) provides that, under 
regulations, any amount paid to a child is treated as if it had been 
paid to the surviving spouse if it will become payable to the surviving 
spouse upon that child reaching the age of majority (or other 
designated event permitted under regulations).
    Section 401(a)(9)(G) provides that any distribution required to 
satisfy the incidental death benefit requirement of section 401(a) is 
treated as a required minimum distribution.
    Section 401(a)(9)(H) (which was added to the Code as part of 
section 401 of the SECURE Act) provides special rules that generally 
apply to the distribution of an employee's remaining interest in a 
defined contribution plan after the death of that employee. 
Specifically, section 401(a)(9)(H)(i) provides that, except in the case 
of a beneficiary who is not a designated beneficiary, section 
401(a)(9)(B)(ii): (1) is applied by substituting 10 years for 5 years; 
and (2) applies whether or not distributions of the employee's interest 
have begun in accordance with section 401(a)(9)(A). Section 
401(a)(9)(H)(ii) provides that section 401(a)(9)(B)(iii) (permitting 
payments over the life or life expectancy of the designated beneficiary 
as an alternative to the 10-year rule) applies only in the case of an 
eligible designated beneficiary. Section 401(a)(9)(H)(iii) provides 
that if an eligible designated beneficiary dies before that 
individual's portion of the employee's interest in the plan has been 
entirely distributed, then section 401(a)(9)(H)(ii) does not apply to 
the beneficiary of the eligible designated beneficiary, and the 
remainder of that portion must be distributed within 10 years after the 
death of the eligible designated beneficiary.
    Section 401(a)(9)(H)(iv) provides that in the case of an applicable 
multi-beneficiary trust, if, under the terms of the trust, it is to be 
divided immediately upon the death of the employee into separate trusts 
for each beneficiary, then section 401(a)(9)(H)(ii) is applied 
separately with respect to the portion of the employee's interest that 
is payable to any disabled or chronically ill eligible designated 
beneficiary. Section 401(a)(9)(H)(iv) (as amended by section 337 of the 
SECURE 2.0 Act) also provides that in the case of an applicable multi-
beneficiary trust, if, under the terms of the trust, no beneficiary 
(other than an eligible designated beneficiary who is disabled or 
chronically ill) has any right to the employee's interest in the plan 
until the death of all of those disabled or chronically ill eligible 
designated beneficiaries with respect to the trust, then: (1) section 
401(a)(9)(B)(iii) (permitting payments over the life expectancy of a 
beneficiary) will apply to the distribution of the employee's interest; 
and (2) any beneficiary who is not disabled or chronically ill will be 
treated as a beneficiary of the eligible designated beneficiary who is 
disabled or chronically ill upon the death of that eligible designated 
beneficiary.
    Section 401(a)(9)(H)(v) (as amended by section 337 of the SECURE 
2.0 Act) defines the term applicable multi-beneficiary trust as a 
trust: (1) that has more than one beneficiary; (2) all of the 
beneficiaries of which are treated as designated beneficiaries for 
purposes of determining the distribution period pursuant to section 
401(a)(9); and (3) at least one of the beneficiaries of which is an 
eligible designated beneficiary who is either disabled or chronically 
ill. Section 401(a)(9)(H)(v) also provides that, for purposes of that 
definition, in the case of a trust described in section 
401(a)(9)(H)(iv)(II), any beneficiary which is an organization 
described in section 408(d)(8)(B)(i) is treated as a designated 
beneficiary.
    Section 401(a)(9)(H)(vi) provides that, for purposes of applying 
section 401(a)(9)(H), an eligible retirement plan defined in section 
402(c)(8)(B) (other than a defined benefit plan described in section 
402(c)(8)(B)(iv) or (v) \1\ or a qualified trust that is a part of a 
defined benefit plan) is treated as a defined contribution plan.
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    \1\ The eligible retirement plans described in sections 
402(c)(8)(B)(iv) and (v) are an annuity plan described in section 
403(a) and an eligible deferred compensation plan described in 
section 457(b) that is maintained by an eligible employer described 
in section 457(e)(1)(A), respectively.
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    Section 401(a)(9)(J) (which was added to the Code by section 201 of 
the SECURE 2.0 Act) provides that a commercial annuity (within the 
meaning of section 3405(e)(6)) that is issued in connection with any 
eligible retirement plan (within the meaning of section 402(c)(8)(B), 
other than a defined benefit plan) is not prohibited from making any of 
the following types of payments: (1) annuity payments that increase by 
a constant percentage, applied not less frequently than annually, at a 
rate that is less than 5 percent per year; (2) certain lump sum 
payments; \2\ (3) an amount which is in the nature of a dividend or 
similar distribution, provided that the issuer of the contract 
determines the amount using reasonable actuarial methods and 
assumptions, as determined in good faith by the issuer of the contract, 
when calculating the initial annuity payments and the issuer's 
experience with respect to those factors; or (4) a final payment upon 
death that does not exceed the excess of the total amount of the 
consideration paid for the annuity payments, less the aggregate amount 
of prior distributions or payments from or under the contract.
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    \2\ Section 401(a)(9)(J)(ii) provides that the lump sum payment 
must either: (1) result in a shortening of the payment period with 
respect to an annuity or a full or partial commutation of the future 
annuity payments, provided that such lump sum is determined using 
reasonable actuarial methods and assumptions, as determined in good 
faith by the issuer of the contract; or (2) accelerate the receipt 
of annuity payments that are scheduled to be received within the 
ensuing 12 months, regardless of whether the acceleration shortens 
the payment period with respect to the annuity, reduces the dollar 
amount of benefits to be paid under the contract, or results in a 
suspension of annuity payments during the period being accelerated.
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Effective Date of SECURE Act Section 401

    Generally, under section 401(b)(1) of the SECURE Act, the 
amendments made by section 401 of the SECURE Act to section 
401(a)(9)(E) and (H) of the Code apply to distributions with respect to 
employees who die after December 31, 2019.
    Section 401(b)(2) of the SECURE Act provides that in the case of a 
plan maintained pursuant to one or more collective bargaining 
agreements between employee representatives and one or more employers 
ratified before December 20, 2019, the amendments to section 
401(a)(9)(E) and (H) of the Code apply to distributions with respect to 
employees who die in calendar years beginning after December 31, 2021, 
or if earlier, the later of: (1) December 31, 2019; and (2) the date on 
which the last

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of the collective bargaining agreements terminated, without regard to 
any extension agreed to on or after the date of enactment of the SECURE 
Act (December 20, 2019).
    Section 401(b)(3) of the SECURE Act provides that, in the case of a 
governmental plan (as defined in section 414(d) of the Code), the 
amendments to section 401(a)(9)(E) and (H) apply to distributions with 
respect to employees who die after December 31, 2021.
    Section 401(b)(4) of the SECURE Act provides that the amendments 
made to section 401(a)(9)(E) and (H) of the Code do not apply to a 
qualified annuity that is a binding annuity contract in effect on the 
date of enactment of the SECURE Act (December 20, 2019) and at all 
times thereafter.\3\
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    \3\ Section 401(b)(4)(B) of the SECURE Act provides that the 
term qualified annuity means, with respect to an employee, an 
annuity--
    (i) which is a commercial annuity (as defined in section 
3405(e)(6) of the Internal Revenue Code of 1986);
    (ii) under which the annuity payments are made over the life of 
the employee or over the joint lives of such employee and a 
designated beneficiary (or over a period not extending beyond the 
life expectancy of such employee or the joint life expectancy of 
such employee and a designated beneficiary) in accordance with the 
regulations described in section 401(a)(9)(A)(ii) of such Code (as 
in effect before such amendments) and which meets the other 
requirements of section 401(a)(9) of such Code (as so in effect) 
with respect to such payments; and
    (iii) with respect to which--
    (I) annuity payments to the employee have begun before the date 
of enactment of the SECURE Act, and the employee has made an 
irrevocable election before such date as to the method and amount of 
the annuity payments to the employee or any designated 
beneficiaries; or
    (II) if subclause (I) does not apply, the employee has made an 
irrevocable election before the date of enactment of the SECURE Act 
as to the method and amount of the annuity payments to the employee 
or any designated beneficiaries.
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    Section 401(b)(5) of the SECURE Act provides that if an employee 
dies before the effective date of section 401(a)(9)(H) of the Code for 
a plan, then, in applying the amendments made to section 401(a)(9)(E) 
and (H) to the employee's designated beneficiary who dies on or after 
the effective date, (1) the amendments apply to any beneficiary of the 
designated beneficiary, and (2) the designated beneficiary is treated 
as an eligible designated beneficiary for purposes of section 
401(a)(9)(H)(ii).

SECURE 2.0 Act Provisions

    Prior to amendment by section 107 of the SECURE 2.0 Act, section 
401(a)(9)(C) of the Code defined the required beginning date by 
reference to the calendar year in which the employee attains age 72. 
Section 107 of the SECURE 2.0 Act changes the age by reference to which 
the required beginning date is determined from 72 to either 73 or 75 
(depending on an employee's date of birth). Section 107(e) of the 
SECURE 2.0 Act provides that the amendments made by section 107 of the 
SECURE 2.0 Act apply to distributions required to be made after 
December 31, 2022, with respect to individuals who attain age 72 after 
that date.
    Section 202 of the SECURE 2.0 Act instructs the Secretary of the 
Treasury (or that person's delegate) to make certain amendments to 
Sec.  1.401(a)(9)-6. Those amendments are: (1) to eliminate the 
requirement that premiums for an individual's qualifying longevity 
annuity contracts (QLACs) be limited to 25-percent of an individual's 
account balance; (2) to increase the dollar limitation on premiums for 
an individual's QLACs from $125,000 to $200,000 (adjusted for 
inflation); (3) to provide that, in the case of a QLAC purchased with 
joint and survivor annuity benefits for an individual and the 
individual's spouse, a divorce occurring after the original purchase 
and before the date that the annuity payments commence under the 
contract will not affect the permissibility of the joint and survivor 
benefits if certain conditions related to an associated qualified 
domestic relations order (or, if applicable, a divorce or separation 
agreement) are met; and (4) to provide that a QLAC may include a 
provision under which an employee may rescind the purchase of the 
contract within a period not exceeding 90 days from the date of 
purchase.
    Section 204 of the SECURE 2.0 Act instructs the Secretary of the 
Treasury (or that person's delegate) to amend the section 401(a)(9) 
regulations to provide that if an employee's benefit is in the form of 
an individual account under a defined contribution plan, then the plan 
may allow the employee to elect to have the amount required to be 
distributed for a calendar year from that account to be calculated as 
the excess of the total required amount for that year over the annuity 
amount for that year. For this purpose, section 204(b)(1) of the SECURE 
2.0 Act defines the total required amount with respect to a calendar 
year as the amount that would be required to be distributed under Sec.  
1.401(a)(9)-5 by including in the balance of that account the value of 
all annuity contracts that were purchased with a portion of that 
account. Section 204(b)(2) of the SECURE 2.0 Act defines the annuity 
amount with respect to a calendar year as the total amount distributed 
in that year from all annuity contracts purchased with a portion of the 
employee's account under the plan. Section 204(c) of the SECURE 2.0 Act 
instructs the Secretary of the Treasury (or that person's delegate) to 
make conforming amendments to the regulations that apply to individual 
retirement plans (as defined in section 7701(a)(37) of the Code), 
section 403(b) plans, and section 457(b) eligible deferred compensation 
plans.
    Section 325 of the SECURE 2.0 Act amended section 402A of the Code 
(relating to designated Roth accounts) to add a new paragraph (d)(5) 
providing that the rules requiring minimum distributions to be paid 
during the employee's lifetime do not apply to a designated Roth 
account. Section 325(b)(1) of the SECURE 2.0 Act provides that this 
amendment applies to taxable years beginning after December 31, 2023. 
However, section 325(b)(2) of the SECURE 2.0 Act provides that the 
amendment does not apply to a required minimum distribution for a year 
beginning before January 1, 2024, that is permitted to be paid by April 
1, 2024.

Section 402(c)--Rollovers

    Section 402(c) of the Code provides rules related to the rollover 
of a distribution from a qualified plan to another eligible retirement 
plan. Prior to being amended by section 641 of the Economic Growth and 
Tax Relief Reconciliation Act of 2001, Public Law 107-16, 115 Stat. 38 
(2001) (EGTRRA), section 402(c)(2) of the Code limited the portion of a 
distribution that could be rolled over to the amount that would have 
been includible in income in the absence of the rollover. Section 641 
of EGTRRA and section 411(q) of the Job Creation and Worker Assistance 
Act of 2002, Public Law 107-147, 116 Stat. 21 (2002), expanded the 
rollover rules to permit a rollover to an IRA of the portion of the 
distribution that would have been excluded from gross income in the 
absence of the rollover (that is, the portion of the amount distributed 
that consists of the employee's investment in the contract). In 
addition, that portion may be transferred in a direct trustee-to-
trustee transfer to a qualified trust or to an annuity contract 
described in section 403(b) of the Code, but only if the trust or 
annuity contract separately accounts for the amount that consists of 
the employee's investment in the contract. If only a portion of an 
eligible rollover distribution is rolled over or transferred, then the 
amount rolled over or transferred is treated as consisting first of the 
portion of the distribution that is not allocable to the employee's 
investment in the contract.
    Under section 402(c), any amount distributed from a qualified plan 
generally will be excluded from income

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if it is transferred to an eligible retirement plan no later than the 
60th day following the day the distribution is received. Section 
402(c)(3)(B) was added to the Code by section 644 of EGTRRA to provide 
that the Secretary may waive the 60-day rollover requirement in certain 
circumstances. Section 402(c)(3)(C) was added to the Code by section 
13613 of the Tax Cuts and Jobs Act, Public Law 115-97, 131 Stat. 2054 
(2017) (TCJA), to provide an extended rollover deadline for qualified 
plan loan offset (QPLO) amounts.\4\ Specifically, the deadline for 
rollover of any portion of a QPLO amount is extended so that it ends no 
earlier than the distributee's tax filing due date (including 
extensions) for the taxable year in which the offset occurs.
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    \4\ A QPLO amount is defined in section 402(c)(3)(C)(ii) as a 
plan loan offset amount that is distributed from a qualified 
employer plan to a participant or beneficiary solely by reason of 
(1) the termination of the qualified employer plan, or (2) the 
failure to meet the repayment terms of the loan from the plan 
because of the severance from employment of the participant.
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    Subject to certain exclusions, section 402(c)(4) provides that an 
eligible rollover distribution means any distribution to an employee of 
all or any portion of the balance to the credit of the employee in a 
qualified plan. Section 402(c)(4)(A) excludes from the definition of an 
eligible rollover distribution any distribution that is one of a series 
of substantially equal periodic payments payable for the life (or life 
expectancy) of the employee (or the employee and the employee's 
designated beneficiary), or for a specified period of 10 years or more. 
Section 402(c)(4)(B) provides that any distribution that is required 
under section 401(a)(9) is excluded from the definition of an eligible 
rollover distribution. Section 402(c)(4)(C), which was added to the 
Code by section 636(b)(1) of EGTRRA, excludes hardship distributions 
from the definition of an eligible rollover distribution.
    Prior to being amended by section 641 of EGTRRA, section 
402(c)(8)(B) of the Code provided that the only type of eligible 
retirement plan permitted to receive a rollover from a qualified plan 
was another qualified plan or an IRA. Section 641 of EGTRRA amended 
section 402(c)(8)(B) of the Code to expand the list of retirement plans 
eligible to receive rollovers to include an annuity contract described 
in section 403(b), and an eligible deferred compensation plan described 
in section 457(b) that is maintained by an eligible employer described 
in section 457(e)(1)(A). Section 617(c) of EGTRRA amended section 
402(c)(8)(B) of the Code to provide that if any portion of an eligible 
rollover distribution is attributable to distributions from a 
designated Roth account (as defined in section 402A), that portion may 
be rolled over only to another designated Roth account or a Roth IRA 
(as described in section 408A). Section 641 of EGTRRA also added 
section 402(c)(10) to the Code to provide that an eligible deferred 
compensation plan described in section 457(b) maintained by an eligible 
employer described in section 457(e)(1)(A) may accept rollovers from a 
different type of eligible retirement plan only if it separately 
accounts for the amounts rolled into the plan.
    Section 402(c)(9) provides that, if any distribution attributable 
to an employee is paid to the spouse of the employee after the 
employee's death, then section 402(c) applies to that distribution in 
the same manner as if the spouse were the employee. At the time section 
402(c)(9) was enacted, a surviving spouse was permitted to roll over an 
eligible rollover distribution only to an IRA. However, section 641 of 
EGTRRA amended section 402(c)(9) of the Code to expand the type of 
eligible retirement plan permitted to receive a spousal rollover to 
include not just an IRA, but also any other eligible retirement plan.
    Section 402(c)(11) was added to the Code by section 829 of the 
Pension Protection Act of 2006, Public Law 109-280, 120 Stat. 780 
(2006) (PPA), to provide that an individual who is not the surviving 
spouse of the employee and who is a designated beneficiary (as defined 
by section 401(a)(9)(E) of the Code) may elect to have any portion of a 
distribution made in the form of a direct trustee-to-trustee transfer 
to an IRA established for the purpose of receiving that distribution. 
If a direct trustee-to-trustee transfer is made pursuant to section 
402(c)(11), then the required minimum distribution rules applicable to 
distributions after the employee's death in section 401(a)(9)(B) (other 
than section 401(a)(9)(B)(iv)) will apply to the IRA. Section 
402(c)(11)(B) provides that the Secretary may prescribe rules under 
which a trust for the benefit of one or more designated beneficiaries 
may be treated as a designated beneficiary for purposes of section 
402(c)(11).
    The rollover rules of section 402(c) also apply to a distribution 
from a section 403(a) qualified annuity plan, a section 403(b) plan, 
and an eligible deferred compensation plan described in section 457(b) 
maintained by an eligible employer described in section 457(e)(1)(A). 
See sections 403(a)(4)(B), 403(b)(8)(B), and 457(e)(16)(B), 
respectively.

Sections 403(a), 403(b), 408, and 457--Other Arrangements Subject to 
Section 401(a)(9)

    Under section 403(a)(1), a qualified annuity plan under section 
403(a) must meet the requirements of section 404(a)(2) (which provides 
that an annuity plan must satisfy the required minimum distribution 
rules under section 401(a)(9)). Sections 403(b)(10), 408(a)(6), and 
408(b)(3) provide that a section 403(b) plan, an individual retirement 
account, and an individual retirement annuity, respectively, must 
satisfy rules similar to the requirements of section 401(a)(9) and the 
incidental death benefit requirements of section 401(a). Under section 
457(b)(5) and (d)(2), a plan is an eligible deferred compensation plan 
described in section 457(b) only if it satisfies the minimum 
distribution requirements of section 401(a)(9).

Section 4974--Excise Tax on Failure To Satisfy Section 401(a)(9)

    Section 4974(a) (as amended by section 302(a) of the SECURE 2.0 
Act) provides that if the amount distributed during the taxable year of 
a payee under any qualified retirement plan (as defined in section 
4974(c)) or any eligible deferred compensation plan (as defined in 
section 457(b)) is less than that taxable year's minimum required 
distribution (as defined in section 4974(b)), then an excise tax is 
imposed on the payee equal to 25 percent of the amount by which the 
minimum required distribution for the taxable year exceeds the amount 
actually distributed in that taxable year.
    Section 4974(d) provides that if the taxpayer establishes to the 
satisfaction of the Secretary that the failure to distribute the entire 
amount required in a taxable year was due to reasonable error and 
reasonable steps are being taken to remedy that shortfall, then the 
Secretary may waive the excise tax imposed in section 4974(a) for that 
taxable year.
    Section 4974(e) (as added to the Code by section 302(b) of the 
SECURE 2.0 Act) provides that in the case of a taxpayer who, by the 
last day of the correction window: (1) receives a distribution from the 
qualified retirement plan or eligible deferred compensation plan of the 
amount by which the required minimum distribution exceeds the actual 
amount distributed during the calendar year from that plan (the 
shortfall); and (2) submits a return reflecting that tax (as modified 
by section 4974(e)), then the

[[Page 58890]]

tax imposed under section 4974(a) is 10 percent of the shortfall (in 
lieu of 25 percent). For this purpose, the correction window ends on 
the earliest of: (1) the date a notice of deficiency under section 6212 
with respect to the tax imposed by section 4974(a) is mailed; (2) the 
date on which the tax imposed by section 4974(a) is assessed; or (3) 
the last day of the second taxable year that begins after the end of 
the taxable year in which the tax under section 4974(a) is imposed.

Good Faith Compliance Standard for Governmental Plans

    Section 823 of PPA provides that a governmental plan (as defined in 
section 414(d) of the Code) is treated as having complied with section 
401(a)(9) if the plan complies with a reasonable, good faith 
interpretation of section 401(a)(9).

2002 Final Regulations and Other Published Guidance

    Final regulations relating to required minimum distributions from a 
qualified plan, an IRA, and a section 403(b) plan have been subject to 
a series of amendments and additions since they were published in the 
Federal Register on April 17, 2002 (67 FR 18834) (referred to in this 
preamble as the ``2002 final regulations''). Final regulations relating 
to required minimum distributions from defined benefit plans and 
annuity contracts were published in the Federal Register on June 15, 
2004 (69 FR 63288) (referred to in this preamble as the ``2004 final 
regulations''). Final regulations published in the Federal Register on 
September 8, 2009 (74 FR 45993) updated the rules to permit a 
governmental plan to comply with the required minimum distribution 
rules using a reasonable, good faith interpretation of section 
401(a)(9). Final regulations relating to qualifying longevity annuity 
contracts were published in the Federal Register on July 2, 2014 (79 FR 
37633). Final regulations published in the Federal Register on November 
12, 2020 (85 FR 72472) updated the life expectancy and distribution 
period tables for distribution calendar years that begin on or after 
January 1, 2022.
    Final regulations relating to section 402(c) and eligible rollover 
distributions were published in the Federal Register on September 22, 
1995 (60 FR 49199). Since those regulations were issued, section 402(c) 
has been amended several times, and guidance related to those 
amendments has generally been issued in the Internal Revenue Bulletin 
rather than through the issuance of new regulations. For example, 
Notice 2007-7, 2007-1 CB 395, provided guidance related to the 
amendments to section 402(c) made by PPA. However, final regulations 
related to the extended period of time to roll over a QPLO amount under 
section 402(c)(3)(C) were published in the Federal Register on January 
6, 2021 (86 FR 464). See Sec.  1.402(c)-3.

Proposed Regulations and Enactment of SECURE 2.0 Act

    Proposed regulations under section 401(a)(9) and related statutory 
provisions were published in the Federal Register on February 24, 2022 
(87 FR 10504).\5\ Comments were received on the proposed regulations, 
and a public hearing was held on June 15, 2022. After the close of the 
comment period, the SECURE 2.0 Act, which affected many of the 
provisions included in the proposed regulations was enacted.
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    \5\ Correction notices were published in the Federal Register 
with respect to the proposed regulations on March 21, 2022 (87 FR 
15907), and May 20, 2022 (87 FR 39845).
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    After consideration of the comments and taking into account the 
enactment of the SECURE 2.0 Act, the proposed regulations are adopted 
by this Treasury decision with certain changes described in the section 
of this preamble entitled ``Summary of Comments and Explanation of 
Revisions.'' Some of the rules in these final regulations that reflect 
provisions of the SECURE 2.0 Act are a clear application of statutory 
language for which it is unnecessary to solicit comments (see 5 U.S.C. 
553(b)). Other rules in these final regulations are the logical 
outgrowth of rules in the proposed regulations that take into account 
both the comments received on those proposed rules and the subsequent 
enactment of the SECURE 2.0 Act. A notice of proposed rulemaking (REG-
103529-23) in the Proposed Rules section of this issue of the Federal 
Register sets forth proposed rules that reflect other provisions of the 
SECURE 2.0 Act relating to section 401(a)(9) of the Code.

Summary of Comments and Explanation of Revisions

    These regulations update several existing regulations under 
sections 401(a)(9), 402(c), 403(b), 457, and 4974 to reflect statutory 
amendments that have been made since those regulations were last issued 
and to clarify certain issues that have been raised in public comments 
and private letter ruling requests. These regulations also replace the 
question-and-answer format of the existing regulations under sections 
401(a)(9), 402(c), 408, and 4974 with a standard format. Rules under 
the 2002 final regulations and the 2004 final regulations that were 
proposed to be retained in the updated regulations generally were not 
discussed in the Explanation of Provisions that accompanied the 
proposed regulations. Similarly, rules under the proposed regulations 
that are included in these final regulations without change generally 
are not discussed in this Summary of Comments and Explanation of 
Revisions.

I. Section 401(a)(9) Regulations

A. Section 1.401(a)(9)-1--Minimum Distribution Requirement in General

1. Statutory Effective Date of the Limitation on Beneficiary Life 
Expectancy Distributions
    Section 1.401(a)(9)-1 provides general rules that apply for all of 
the regulations under section 401(a)(9), including rules addressing 
application of the effective date of section 401(a)(9)(H), which was 
added to the Code by section 401 of the SECURE Act to limit which 
beneficiaries may take distributions over their life expectancies. 
Generally, the amendments made by section 401 of the SECURE Act apply 
to distributions with respect to an employee who dies on or after 
January 1, 2020 (with a later effective date for certain collectively 
bargained plans or governmental plans). In addition, if an employee in 
a plan died before the section 401(a)(9)(H) effective date for that 
plan, the employee had only one designated beneficiary, and the 
employee's designated beneficiary dies on or after that effective date, 
then the amendments made by section 401 of the SECURE Act apply to any 
beneficiary of the designated beneficiary. In this situation, the 
designated beneficiary is treated as an eligible designated beneficiary 
for purposes of the 10-year payout required by section 
401(a)(9)(H)(iii). Accordingly, the death of the designated beneficiary 
triggers a requirement to complete payment by the end of the calendar 
year that includes the tenth anniversary of the date of the death of 
that designated beneficiary. In contrast, if that designated 
beneficiary died before that effective date, then the amendments made 
by section 401 of the SECURE Act do not apply with respect to the 
employee's interest under the plan.
    Under the proposed regulations, if an employee in a plan who died 
before the section 401(a)(9)(H) effective date for that plan had more 
than one designated beneficiary, whether the amendments made by section 
401 of the SECURE Act apply depends on when the oldest of

[[Page 58891]]

those beneficiaries dies. Thus, for example, if an employee who died 
before January 1, 2020, named a see-through trust as the sole 
beneficiary of the employee's interest in the plan, and the trust has 
three beneficiaries who are all individuals, then the amendments made 
by section 401 of the SECURE Act will apply with respect to 
distributions to the trust upon the death of the oldest trust 
beneficiary, but only if that beneficiary dies on or after the section 
401(a)(9)(H) effective date for that plan. However, if the oldest of 
the trust beneficiaries died before that effective date, then the 
amendments made by section 401 of the SECURE Act do not apply with 
respect to distributions to the trust. Some commenters asked how these 
effective date rules apply if the beneficiaries were using the separate 
account alternative (under which section 401(a)(9) is applied 
separately to the separate accounts for each beneficiary). In that 
case, the separate application of section 401(a)(9) with respect to the 
separate account for a beneficiary is used to determine whether section 
401(a)(9)(H) applies to that beneficiary.
    The proposed regulations reflected the exception for a qualified 
annuity (that is, an annuity contract for which an employee made an 
irrevocable election as to the method and the amount of the annuity 
payments before December 20, 2019) described in section 401(b)(4) of 
the SECURE Act. One commenter raised questions regarding whether the 
requirements for an irrevocable election as to the method and amount of 
annuity payments under the contract meant that the contract loses its 
exception from the application of section 401(a)(9)(H) merely because 
the contract permits additional premiums to be paid or permits the 
annuitant to select when distributions under the contract commence. The 
final regulations do not change the requirement that, in order for the 
contract to be excepted from the application of section 401(a)(9)(H), 
the method and amount of annuity payments under the contract be 
irrevocably selected before December 20, 2019. For this purpose, the 
mere ability to pay an additional premium or change the commencement 
date of benefits under the contract after December 20, 2019, does not 
cause the contract to lose its exception from the application of 
section 401(a)(9)(H). However, if an individual paid an additional 
premium or changed the commencement date of benefits under the contract 
after that date, then the contract would lose its exception.
    Commenters also requested that the final regulations apply the 
qualified annuity exception to the situation in which the employee had 
died and, after the employee's death, the beneficiary had made an 
irrevocable election as to the method and the amount of the annuity 
payments before December 20, 2019. These final regulations make that 
change.
2. Applicability Date of Final Regulations Under Section 401(a)(9)
    A number of commentators requested that the applicability date of 
the final regulations be delayed from the proposed applicability date 
of distribution calendar years beginning on or after January 1, 2022, 
in order to provide adequate time for plan administrators and IRA 
providers to familiarize themselves with the new rules and to update 
administrative systems to implement necessary changes. In response to 
these comments, the final regulations under section 401(a)(9) apply for 
distribution calendar years beginning on or after January 1, 2025. For 
earlier distribution calendar years, taxpayers must apply the 2002 
final regulations and 2004 final regulations, but taking into account a 
reasonable, good faith interpretation of the amendments made by 
sections 114 and 401 of the SECURE Act.\6\ For the 2023 and 2024 
distribution calendar years, taxpayers must also take into account a 
reasonable, good faith interpretation of the amendments made by 
sections 107, 201, 202, 204, and 337 of the SECURE 2.0 Act.
---------------------------------------------------------------------------

    \6\ The preamble to the proposed regulations provided that 
compliance with the proposed regulations will be treated as a 
reasonable, good faith interpretation of the amendments made by 
sections 114 and 401 of the SECURE Act.
---------------------------------------------------------------------------

B. Section 1.401(a)(9)-2--Distributions Commencing During an Employee's 
Lifetime

    Section 1.401(a)(9)-2 provides rules for determining the required 
beginning date for distributions and whether distributions are treated 
as having begun during an employee's lifetime. These rules are based on 
the rules in the 2002 final regulations, except that the rules have 
been updated to reflect the amendments to the required beginning date 
made by section 114 of the SECURE Act and section 107 of the SECURE 2.0 
Act.
    Specifically, these regulations generally provide that the required 
beginning date is April 1 of the calendar year following the later of 
(1) the calendar year in which the employee reaches the applicable age, 
and (2) the calendar year in which the employee retires from employment 
with the employer maintaining the plan. These regulations provide that 
the applicable age is determined based on an employee's date of birth, 
as follows: (1) for employees born before July 1, 1949, the applicable 
age is 70\1/2\; (2) for employees born on or after July 1, 1949, but 
before January 1, 1951, the applicable age is 72; (3) for employees 
born on or after January 1, 1951, but before January 1, 1959, the 
applicable age is 73; and (4) for employees born on or after January 1, 
1960, the applicable age is 75.\7\ The final regulations make 
conforming changes by replacing references to age 72 in the proposed 
regulations (when referring to the age for determining the required 
beginning date) with references to the applicable age. The Summary of 
Comments and Explanation of Revisions section of this preamble 
generally does not describe those changes.
---------------------------------------------------------------------------

    \7\ Section 107 of the SECURE 2.0 Act includes an ambiguity 
relating to the definition of applicable age for employees born in 
1959 (section 401(a)(9)(C)(v) provides that the applicable age for 
those employees is both 73 and 75). Accordingly, these regulations 
reserve a paragraph that defines the applicable age for employees 
born in 1959, and that issue is addressed in a notice of proposed 
rulemaking (REG-103529-23) in the Proposed Rules section of this 
issue of the Federal Register.
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    One commenter asked whether a plan could provide a uniform required 
beginning date of April 1 of the calendar year following the year an 
employee attains age 70\1/2\ that would apply to all employees in the 
plan regardless of the employee's date of birth. While the final 
regulations do not provide for such an option, the Department of the 
Treasury (Treasury Department) and the IRS note that, subject to the 
requirements of section 411(a)(11), a plan could require benefits to 
commence by that date. In addition, in the case of a defined benefit 
plan, Sec.  1.401(a)(9)-6(k) provides that if distributions start prior 
to the required beginning date in a distribution form that is an 
annuity under which distributions are made in accordance with the 
requirements of that section, then the annuity starting date will 
generally be treated as the required beginning date for purposes of 
applying the rules of section 401(a)(9).
    Another commenter asked whether an employee who is not a 5-percent 
owner, has benefits under a plan maintained by more than one employer, 
and retires from employment from any of the employers participating in 
the plan is treated as having retired for purposes of section 
401(a)(9)(C) if that employee is employed by a different employer 
participating in the same plan. The final regulations add language 
clarifying that the employee is not treated as having

[[Page 58892]]

retired for purposes of section 401(a)(9)(C)(i)(II) in this situation.

C. Section 1.401(a)(9)-3--Death Before Required Beginning Date

    Section 1.401(a)(9)-3 provides rules for distributions if an 
employee dies before the employee's required beginning date. These 
rules are based on the rules in the 2002 final regulations but are 
updated to reflect new section 401(a)(9)(H). For example, the option 
for a designated beneficiary of an employee who participates in a 
defined contribution plan to elect to receive distributions over the 
designated beneficiary's life expectancy is limited to an eligible 
designated beneficiary. These regulations are also updated to reflect 
the amendment to section 402A(d) made by section 325 of the SECURE 2.0 
Act and provide that if an employee's entire interest under a defined 
contribution plan is in a designated Roth account, then no 
distributions are required to be made to the employee during the 
employee's lifetime. Thus, upon the employee's death, that employee is 
treated as having died before his or her required beginning date.
    The proposed regulations described satisfaction of the life 
expectancy rule for an eligible designated beneficiary of an employee 
in a defined contribution plan by reference to the rules in Sec.  
1.401(a)(9)-5. The final regulations clarify that the requirement to 
take an annual distribution in accordance with the preceding sentence 
continues to apply for all subsequent calendar years until the 
employee's interest is fully distributed. Thus, a required minimum 
distribution is due for the calendar year of the eligible designated 
beneficiary's death, and that amount must be distributed during that 
calendar year to any beneficiary of the deceased eligible designated 
beneficiary to the extent it has not already been distributed to the 
eligible designated beneficiary.
    Under the proposed regulations, if the employee has a designated 
beneficiary (who is an eligible designated beneficiary in the case of a 
defined contribution plan), the plan may: (1) provide that the 5-year 
rule (in the case of a defined benefit plan) or 10-year rule (in the 
case of a defined contribution plan) applies; (2) provide that the life 
expectancy rule applies; or (3) permit the employee or the designated 
beneficiary to elect between the applicable 5-year or 10-year rule or 
the life expectancy rule.\8\ The proposed regulations also provided 
that, if a plan permits an employee or designated beneficiary to elect 
between the applicable 5-year or 10-year rule and the life expectancy 
rule, then the plan must specify the default that would apply when the 
employee or designated beneficiary has not made an election. Consistent 
with requests made by commenters, the final regulations provide that 
the requirement to specify a default applies only if the plan is 
intended to be operated using a default different than the default that 
would apply under the regulations if the employee or designated 
beneficiary did not make an affirmative election. Thus, for example, if 
the intended operation in the absence of an election is that a 
surviving spouse who is the sole beneficiary is to wait to begin 
distributions until the employee would have reached the applicable age, 
then the plan is not required to provide for a default (because that is 
the rule that would apply under the regulations if the surviving spouse 
did not make an affirmative election).
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    \8\ If a defined contribution plan does not include either the 
provision that applies the 10-year rule or the provision under which 
a beneficiary can elect between the 10-year rule and the life 
expectancy rule, then the plan must provide that the life expectancy 
rule applies for an eligible designated beneficiary.
---------------------------------------------------------------------------

    In addition, consistent with requests made by commenters, the final 
regulations clarify that a defined contribution plan may provide that a 
particular distribution method will apply to certain categories of 
eligible designated beneficiaries or that an election as to which 
distribution method applies is available only for certain categories of 
eligible designated beneficiaries. Thus, for example, a plan may 
provide that only an employee's surviving spouse may elect between the 
10-year rule and life expectancy payments.

D. Section 1.401(a)(9)-4--Determination of the Designated Beneficiary

    Section 1.401(a)(9)-4 provides rules addressing the determination 
of the employee's beneficiary for purposes of section 401(a)(9), 
including the definition of eligible designated beneficiary in section 
401(a)(9)(E)(ii). Section 1.401(a)(9)-4 also provides rules addressing 
the treatment of trust beneficiaries as designated beneficiaries when a 
trust is named as the beneficiary of an employee's interest in a plan.
1. Eligible Designated Beneficiaries
    Under section 401(a)(9)(E)(ii), an eligible designated beneficiary 
is a designated beneficiary who, as of the date of the employee's 
death, is (1) the surviving spouse of the employee, (2) a child of the 
employee who has not yet reached the age of majority, (3) disabled, (4) 
chronically ill, or (5) not more than 10 years younger than the 
employee.
a. Definition of Child
    Under section 401(9)(E)(ii)(III), one of the categories of eligible 
designated beneficiary is a child of the employee who has not yet 
reached the age of majority. Consistent with requests made by 
commenters, the final regulations clarify that the definition of child 
in section 152(f)(1) applies for this purpose (so that the definition 
includes a stepchild, an adopted child, and an eligible foster child).
b. Definition of Disability
    The regulations provide rules for the determination of whether an 
individual is disabled for purposes of section 401(a)(9). Section 
401(a)(9)(E)(ii)(III) applies the definition of disability under 
section 72(m)(7) for purposes of section 401(a)(9). Section 72(m)(7) 
provides a standard of disability based on whether an individual is 
unable to engage in substantial gainful activity. However, that 
standard may be difficult to apply for individuals under age 18. 
Accordingly, if, as of the date of the employee's death, a beneficiary 
is younger than age 18, then the regulations apply a comparable 
standard that requires the beneficiary to have a medically determinable 
physical or mental impairment that results in marked and severe 
functional limitations, and that can be expected to result in death or 
to be of long-continued and indefinite duration.
    These regulations also provide a safe harbor for the determination 
of whether a beneficiary is disabled. Specifically, if, as of the date 
of the employee's death, the Commissioner of Social Security has 
determined that the individual is disabled within the meaning of 42 
U.S.C. 1382c(a)(3), then that individual will be deemed to be disabled 
for purposes of section 401(a)(9) of the Code. The final regulations 
clarify that this alternative is merely a safe harbor and that a 
beneficiary who does not have a Social Security determination of 
disability can apply the general standards described in the preceding 
paragraph.
    Several commenters asked for additional safe harbors for the 
determination of whether a beneficiary is disabled. For example, one 
commenter requested that the final regulations include a safe harbor 
under which a beneficiary is considered to be a disabled individual if 
a State court has determined that the beneficiary is incapacitated for 
purposes of State guardianship proceedings. Another

[[Page 58893]]

commentor asked for a safe harbor under which an individual is treated 
as disabled or chronically ill if that individual is an eligible 
individual with respect to an ABLE account as described in section 
529A(e)(1). The regulations do not provide for those safe harbors 
because the standards required for a State law guardianship proceeding 
or to be an eligible individual with respect to an ABLE account could 
be broader than the definition of disability in section 72(m)(7).
c. Documentation Requirements for Disabled or Chronically Ill Status
    The regulations provide that, with respect to a beneficiary who is 
disabled or chronically ill as of the date of the employee's death, 
documentation of the disability or chronic illness must be provided to 
the plan administrator no later than October 31 of the calendar year 
following the calendar year of the employee's death. If the designated 
beneficiary is chronically ill under any of the definitions in section 
7702B(c)(2)(A) as of the date of the employee's death, the 
documentation must include a certification by a licensed health care 
practitioner (as defined in section 7702B(c)(4)) that the designated 
beneficiary is chronically ill. Additionally, in accordance with 
section 401(a)(9)(E)(ii)(IV), if the beneficiary is chronically ill 
under the definition in section 7702B(c)(2)(A)(i), then the 
documentation also must include a certification from a licensed health 
care practitioner that, as of the date of the certification, the 
individual is unable to perform (without substantial assistance from 
another individual) at least 2 activities of daily living and the 
period of that inability is an indefinite one that is reasonably 
expected to be lengthy in nature.
    For a designated beneficiary who is an eligible designated 
beneficiary because, at the time of the employee's death, the 
designated beneficiary is the employee's minor child and that child 
also is disabled or chronically ill within the meaning of the 
regulations, the designated beneficiary will continue to be treated as 
an eligible designated beneficiary after reaching the age of majority 
(on account of being disabled or chronically ill) only if these 
documentation requirements are timely met with respect to that 
designated beneficiary. Similarly, if the employee's designated 
beneficiary is the employee's surviving spouse and that spouse also is 
disabled or chronically ill at the time of the employee's death, then 
the surviving spouse will be treated as disabled or chronically ill for 
purposes of the applicable multi-beneficiary trust rules only if the 
documentation requirements are timely met with respect to the surviving 
spouse.
    One commenter requested that the final regulations replace the 
October 31 deadline for providing documentation reflecting a designated 
beneficiary's disability or chronic illness and instead provide that 
the deadline be before a full distribution would be required if the 
beneficiary was not disabled. The regulations do not make that change 
because of the need for a medical assessment of the designated 
beneficiary's disability or chronic illness as of the date of the 
employee's death. Allowing a 10-year delay before making this medical 
assessment (or an even further delay in the case of a child of the 
employee who had not reached the age of majority as of the date of the 
employee's death) could result in a less reliable assessment that the 
beneficiary was disabled or chronically ill as of the date of the 
employee's death than an assessment made within a short period after 
that date.
    Several commenters requested that plan administrators be permitted 
to rely on self-certifications from a designated beneficiary (or, in 
the case of a see-through trust, the trustee of that trust) that the 
beneficiary is disabled or chronically ill within the meaning of Sec.  
1.401(a)(9)-4(d). The commenters argued that plan administrators and 
IRA custodians should not be required to review personal health records 
or similar documents to determine whether a beneficiary is disabled or 
chronically ill and that the self-certification process has already 
been established for other areas of plan administration, including in 
the case of coronavirus-related distributions pursuant to Notice 2020-
50, 2020-28 IRB 35.
    The Treasury Department and the IRS generally disagree with the 
commenters' request that plan administrators should be able to rely on 
a beneficiary's self-certification of disability or chronic illness. 
This documentation requirement is different than that of coronavirus-
related distributions because there is the potential for a delay of 
distributions of the employee's account for long periods if the 
beneficiary meets the disabled or chronically ill standard in the Code. 
As a result, plans should require documentation from a licensed health 
care practitioner (rather than rely on a certification by the 
beneficiary).
    While the final regulations do not eliminate the deadline to 
provide documentation to a plan administrator, an example illustrating 
this rule has been modified to show that the required documentation 
need not be overly detailed. Under the example, the licensed health 
care practitioner merely certifies that, as of a specified date, the 
designated beneficiary is unable to engage in any substantial gainful 
activity by reason of a physical impairment that can be expected to be 
of long-continued and indefinite duration. In addition, the regulations 
include a transition rule for the documentation deadline in the case of 
an employee who died in 2020, 2021, 2022, or 2023. In that case, the 
documentation of the designated beneficiary's disability or chronic 
illness does not need to be furnished to the plan administrator until 
October 31, 2025. Finally, as described in section IV of this Summary 
of Comments and Explanation of Revisions, the final regulations provide 
that there is no requirement to provide documentation of a designated 
beneficiary's disability or chronic illness to an IRA custodian.
2. Trust as Beneficiary
    The final regulations retain the see-through trust concept in the 
2002 final regulations under which certain beneficiaries of a trust are 
treated as beneficiaries of the employee if the trust meets specified 
requirements. Specifically, to be a see-through trust, the trust must 
meet the following requirements: (1) the trust is valid under State law 
or would be valid but for the fact that there is no corpus; (2) the 
trust is irrevocable or will, by its terms, become irrevocable upon the 
death of the employee; (3) the beneficiaries of the trust who are 
beneficiaries with respect to the trust's interest in the employee's 
benefit are identifiable; and (4) the specified documentation 
requirements are satisfied.
a. Determining Which See-Through Trust Beneficiaries Are Treated as 
Beneficiaries of the Employee
1. See-Through Trust Beneficiaries Taken Into Account
    Generally, the regulations provide that a beneficiary of a see-
through trust is treated as a beneficiary of the employee if the 
beneficiary could receive amounts in the trust representing the 
employee's interest in the plan that are neither contingent upon nor 
delayed until the death of another trust beneficiary who does not 
predecease (and who is not treated as having predeceased) \9\ the 
employee. A

[[Page 58894]]

beneficiary described in the preceding sentence is referred to as a 
primary beneficiary in this Summary of Comments and Explanation of 
Revisions. One commenter requested that the final regulations provide a 
uniform simultaneous death provision for determining whether one 
beneficiary predeceases another beneficiary. The final regulations do 
not adopt this request because the disposition of property interests is 
governed by State law rather than by these regulations.
---------------------------------------------------------------------------

    \9\ For purposes of this rule, a beneficiary is treated as 
having predeceased the employee if the beneficiary is treated as 
predeceasing the employee pursuant to a simultaneous death provision 
under applicable State law or a qualified disclaimer satisfying 
section 2518 that applies to the entire interest to which the 
beneficiary is entitled.
---------------------------------------------------------------------------

    Whether any other see-through trust beneficiary also is treated as 
a beneficiary of the employee depends upon whether the see-through 
trust is a conduit trust or an accumulation trust. A conduit trust is 
defined in the regulations as a see-through trust, the terms of which 
provide that all plan distributions will, upon receipt by the trustee, 
be paid directly to, or for the benefit of, primary beneficiaries 
during their lifetimes. For example, if an employee names a see-through 
trust as the beneficiary of the employee's interest in a plan and the 
trust terms provide that all distributions from the plan to the trust 
during the surviving spouse's life will, upon receipt by the trustee, 
be paid directly to that surviving spouse, then the trust is a conduit 
trust and the surviving spouse is treated as a beneficiary of the 
employee because the surviving spouse could receive amounts in the 
trust with respect to the deceased employee's interest in the plan that 
are neither contingent upon nor delayed until the death of another 
trust beneficiary. In this case, any beneficiary who could receive 
distributions from the trust with respect to the deceased employee's 
interest in the plan after the surviving spouse's death is not treated 
as a beneficiary of the employee.
    An accumulation trust is any see-through trust that is not a 
conduit trust, and under an accumulation trust, there are potentially 
more beneficiaries. A beneficiary of an accumulation trust is treated 
as a beneficiary of the employee if that beneficiary could receive 
amounts accumulated in the trust representing the employee's interest 
in the plan that were not distributed to other beneficiaries during 
their lifetimes (unless that beneficiary is disregarded pursuant to the 
rules described in section II.D.2.a.2 of this Summary of Comments and 
Explanation of Revisions). A beneficiary described in the preceding 
sentence is referred to as a residual beneficiary in this Summary of 
Comments and Explanation of Revisions.
    As an illustration of the rule in the preceding paragraph, assume 
an employee designates a see-through trust as the sole beneficiary of 
the employee's interest in the plan. The terms of the see-through trust 
provide that the trustee is to pay specified amounts from the trust to 
the employee's surviving spouse, but do not provide that all plan 
distributions made to the trust will, upon receipt by the trustee, be 
paid directly to, or for the benefit of, the spouse. Upon the spouse's 
death, the see-through trust will terminate and the amounts remaining 
in the trust will be paid to the employee's brother. The surviving 
spouse is treated as a beneficiary of the employee (because the 
surviving spouse could receive amounts in the see-through trust 
representing the deceased employee's interest in the plan that are 
neither contingent upon nor delayed until the death of another trust 
beneficiary). Moreover, because not all distributions from the plan to 
the see-through trust are required, upon receipt by the trustee, to be 
paid directly to, or for the benefit of, a trust beneficiary, the trust 
is an accumulation trust. As a result, the employee's brother is 
treated as a beneficiary of the employee because he is the residual 
beneficiary of an accumulation trust (unless the employee's brother is 
disregarded pursuant to the rules described in section II.D.2.a.2 of 
this Summary of Comments and Explanation of Revisions).
    One commenter requested that the final regulations provide that a 
see-through trust can still be a conduit trust if it includes certain 
trust terms. Specifically, the commenter requested that final 
regulations provide that a see-through trust will not fail to be 
treated as a conduit trust merely because that trust does not provide 
that, with respect to the deceased employee's interest in the plan, all 
distributions will, upon receipt by the trustee, be paid directly to a 
specified beneficiary provided that the beneficiary has a unilateral 
withdrawal right with respect to those amounts. The final regulations 
do not include this change because the Treasury Department and the IRS 
are concerned that if a trust merely provides a beneficiary with this 
type of unilateral withdrawal right (rather than providing that any 
distribution from the plan, upon receipt by the trustee, be paid 
directly to that beneficiary), then there could be an accumulation 
within the trust of amounts representing the employee's interest in the 
plan that could be paid to a different trust beneficiary. In those 
cases, the trust beneficiaries who could benefit from that accumulation 
should also be treated as beneficiaries of the employee for purposes of 
section 401(a)(9) (without regard to the taxability of the 
distribution).
    Commenters requested that the regulations clarify the see-through 
trust rules in the case of payments that are not made directly to the 
trust beneficiary but are made indirectly for the benefit of the trust 
beneficiary (such as payments to a custodial account for the benefit of 
a minor child). In response to those comments, these regulations 
provide that a trust beneficiary will be treated as if that beneficiary 
could receive amounts in the trust representing the employee's interest 
in the plan regardless of whether those amounts could be paid directly 
to that beneficiary or indirectly for the benefit of that beneficiary.
2. Disregarded Beneficiaries of See-Through Trusts
    The regulations provide for certain beneficiaries of a see-through 
trust to be disregarded as beneficiaries of the employee for purposes 
of section 401(a)(9). Specifically, a beneficiary of a see-through 
trust is not treated as a beneficiary of the employee if that trust 
beneficiary could receive payments from the trust that represent the 
employee's interest in the plan only after the death of another trust 
beneficiary who is a residual beneficiary (and is not also a primary 
beneficiary) who did not predecease (and is not treated as having 
predeceased) the employee.
    One commenter requested that the disregard described in the 
preceding paragraph should not be affected by a trustee's ability to 
make sprinkling distributions to a residual beneficiary (that is, 
distributions for the health, support, or maintenance of that residual 
beneficiary) during the lifetime of a primary beneficiary. The Treasury 
Department and the IRS disagree with this request because of the 
potential for the primary beneficiary to be entitled to only a nominal 
amount (so that the residual beneficiary entitled to sprinkling 
distributions is effectively the primary beneficiary). In that case, 
the beneficiary who is entitled to amounts representing the employee's 
interest in the plan after the death of the residual beneficiary has a 
significant interest in amounts accumulated in the trust representing 
the employee's interest in the plan and should be treated as a 
beneficiary of the employee.
    The regulations provide another exception under which a see-through 
trust beneficiary with a residual interest

[[Page 58895]]

is disregarded as a beneficiary of the employee. Specifically, the 
regulations provide that if the see-through trust terms require a full 
distribution of amounts in the trust representing the employee's 
interest in the plan to a specified trust beneficiary by the later of: 
(1) the calendar year following the calendar year of the employee's 
death; and (2) the end of the calendar year that includes the tenth 
anniversary of the date the designated beneficiary reaches the age of 
majority, then any other beneficiary whose sole entitlement to 
distributions is conditioned on the specified trust beneficiary's death 
before the full distribution is required is disregarded as a 
beneficiary of the employee.
    One commenter requested that the final regulations also disregard 
beneficiaries who have a contingent interest in the employee's benefit 
under the plan if the likelihood of that contingency occurring is 
remote (for example, the probability of that contingency occurring is 
less than 5 percent). The final regulations do not adopt this broad 
disregard because it is too difficult to determine the likelihood of a 
stated event occurring prior to a specified date in cases other than an 
individual reaching a particular age or a residual beneficiary 
predeceasing another designated beneficiary entitled to amounts in the 
trust.
b. Documentation Requirements for See-Through Trusts
    The proposed regulations adopted the see-through trust 
documentation requirements described in the 2002 final regulations. The 
documentation requirements in the proposed regulations generally 
provided that the plan administrator must timely receive either (1) a 
copy of the actual trust instrument, or (2) a list of all the trust 
beneficiaries, including contingent beneficiaries, with a description 
of the conditions on their entitlement sufficient to establish who are 
the beneficiaries.
    Commenters noted that plan administrators and IRA custodians are 
not experts in the intricacies of various State trust laws and thus, 
are not qualified to read through complex trust instruments to 
determine who the beneficiaries are for purposes of section 401(a)(9). 
The commenters requested that final regulations allow for a 
certification from the trustee of the trust as to the beneficiaries who 
are to be treated as beneficiaries of the employee for purposes of 
section 401(a)(9). The final regulations do not permit a trustee to 
certify to a plan administrator the list of beneficiaries to be treated 
as beneficiaries of the employee because plan administrators are better 
suited to determine how section 401(a)(9) applies with respect to an 
employee.
    As an alternative to allowing a plan administrator to rely on the 
trustee's certification of the trust beneficiaries who are to be 
treated as the employee's beneficiaries for purposes of section 
401(a)(9), the commenters requested that final regulations allow for a 
plan administrator to specify that a list of the trust beneficiaries 
with a description of the conditions on their entitlement must be 
provided (rather than the actual trust document). The final regulations 
clarify that a plan administrator may choose which of the two 
alternatives will be accepted. Thus, the plan administrator may require 
the trustee to provide a list of trust beneficiaries with a description 
of the conditions on their entitlement in lieu of the actual trust 
document. In addition, as described in section IV of this Summary of 
Comments and Explanation of Revisions, the regulations provide that a 
trustee of a see-through trust is not required to provide the trust 
documentation to an IRA custodian, trustee, or issuer.
c. Applicable Multi-Beneficiary Trusts
    The proposed regulations provided guidance on a particular type of 
see-through trust defined in section 401(a)(9)(H)(v) as an applicable 
multi-beneficiary trust. Specifically, the proposed regulations defined 
two types of applicable multi-beneficiary trusts. A type I applicable 
multi-beneficiary trust is a trust with at least one beneficiary who is 
disabled or chronically ill, the terms of which provide that the trust 
is to be divided immediately upon the death of the employee into 
separate trusts for each beneficiary (as described in section 
401(a)(9)(H)(iv)(I)). A type II applicable multi-beneficiary trust is 
an applicable multi-beneficiary trust, the terms of which provide that 
no individual other than a disabled or chronically ill eligible 
designated beneficiary has any right to the employee's interest in the 
plan until the death of all such eligible designated beneficiaries with 
respect to the trust (as described in section 401(a)(9)(H)(iv)(II)).
    The proposed regulations permitted section 401(a)(9) to be applied 
separately with respect to the separate interests of the beneficiaries 
reflected in the separate trusts of a type I applicable multi-
beneficiary trust. However, the final regulations do not include a 
definition of a type I applicable multi-beneficiary trust. This is 
because, as described in section I.H of this Summary of Comments and 
Explanation of Revisions, the final regulations include a broader rule 
that permits separate application of section 401(a)(9) with respect to 
the separate interests of the beneficiaries reflected in a trust if 
that trust is to be divided immediately upon the death of the employee 
into separate trusts for each beneficiary, without regard to whether 
any of the beneficiaries are disabled or chronically ill.
    With respect to the definition of a type II applicable multi-
beneficiary trust, one commenter requested that the final regulations 
provide that the trust be permitted to include beneficiaries that are 
not individuals (such as a charity) that are entitled to distributions 
after the death of the disabled or chronically ill beneficiary. Section 
337(b) of the SECURE 2.0 Act amended section 401(a)(9)(H)(v) of the 
Code to provide a modified version of that request. Accordingly, these 
regulations adopt a modified version of the definition of a type II 
applicable multi-beneficiary trust from the proposed regulations. Under 
that modification, certain organizations described in section 
170(b)(1)(A) to which charitable contributions may be made are treated 
as designated beneficiaries.\10\
---------------------------------------------------------------------------

    \10\ The final regulations also reflect the change to section 
401(a)(9)(H)(iv)(II) of the Code made by section 337 of the SECURE 
2.0 Act. Under this change, the restriction on payments from a type 
II applicable multi-beneficiary trust prior to the death of the 
disabled or chronically ill individual applies to any other 
beneficiary (rather than applying to any other individual).
---------------------------------------------------------------------------

    In addition, one commenter requested clarification in the case of a 
trust that provides for a disabled or chronically ill eligible 
designated beneficiary's interest in the trust to be terminated if 
necessary to preserve eligibility for certain public benefits. These 
regulations continue to require that no trust beneficiary other than 
the disabled or chronically ill beneficiary may receive payments from 
the trust prior to the death of that beneficiary in order for the trust 
to be treated as an applicable multi-beneficiary trust. However, if the 
trust provides that the other trust beneficiaries cannot receive any 
amounts from the trust until the death of the disabled or chronically 
ill beneficiary notwithstanding whether that beneficiary's interest in 
the trust is terminated, then the termination provision will not cause 
the trust to fail to be treated as an applicable multi-beneficiary 
trust. In this case, if the disabled or chronically ill beneficiary's 
interest is terminated pursuant to that trust provision after September 
30 of the calendar year following the calendar year of the employee's 
death, then the trust is treated as having been modified

[[Page 58896]]

to add those other beneficiaries as of the date the termination 
occurred.

E. Section 1.401(a)(9)-5--Required Minimum Distributions From Defined 
Contribution Plans

1. In General
    Like the proposed regulations, these final regulations retain the 
general method in the 2002 final regulations by which a required 
minimum distribution from a defined contribution plan is calculated in 
any calendar year when an employee dies on or after the required 
beginning date or when an employee's eligible designated beneficiary is 
taking annual life expectancy payments after an employee dies before 
the required beginning date. Specifically, the required minimum 
distribution for a calendar year is determined by dividing the 
employee's account balance as of the end of the prior calendar year by 
the applicable denominator. In addition to the requirement to take 
annual required minimum distributions, the regulations implement the 
amendments made by section 401 of the SECURE Act by requiring that a 
full distribution of the employee's remaining interest be taken in 
certain circumstances.
2. Purchase of Annuity Contract With Portion of Employee's Individual 
Account
    The 2002 final regulations provided a special bifurcation rule in 
the case of an employee with an individual account who used a portion 
of that account to purchase an annuity contract. In that case, those 
regulations provided that payments from the annuity contract were 
required to satisfy the rules of Sec.  1.401(a)(9)-6 and payments of 
the remaining account balance were required to satisfy the rules of 
Sec.  1.401(a)(9)-5. In addition, because the required minimum 
distribution for a calendar year is determined based on the account 
balance as of the end of the previous calendar year, the 2002 final 
regulations provided that, for the calendar year in which the annuity 
contract is purchased, payments made under the contract are treated as 
distributions from the individual account for purposes of determining 
whether section 401(a)(9) has been satisfied with respect to that 
account. The proposed regulations generally retained these rules.
    In accordance with section 204 of the SECURE 2.0 Act, these 
regulations provide that a plan may allow the employee to elect to have 
the amount required to be distributed for a calendar year from an 
individual account to be calculated as the excess of the total required 
amount (as defined in section 204(b)(1) of the SECURE 2.0 Act) for that 
year over the annuity amount (as defined in section 204(b)(2) of the 
SECURE 2.0 Act) for that year. Accordingly, these final regulations 
provide an alternative to the bifurcation rule described in the 
preceding paragraph. Under this rule, in lieu of satisfying section 
401(a)(9) separately with respect to the annuity contract and the 
remaining account balance, a plan may permit an employee to elect to 
satisfy section 401(a)(9) for the annuity contract and that account 
balance in the aggregate by adding the fair market value of the 
contract to the remaining account balance and treating payments under 
the annuity contract as distributions from the individual account. 
These regulations reserve a paragraph for rules of operation with 
respect to this alternative, including guidance related to the 
determination of the fair market value of the annuity contract. These 
rules are included in a notice of proposed rulemaking (REG-103529-23) 
in the Proposed Rules section of this issue of the Federal Register.
3. Distributions After the Employee's Death
a. Requirement To Satisfy Both Section 401(a)(9)(B)(i) and (ii) in the 
Case of an Employee Who Dies On or After the Required Beginning Date
    Section 401(a)(9)(B)(i) provides rules that apply if an employee 
dies after benefits have commenced. While the 5-year rule under section 
401(a)(9)(B)(ii) generally applies if an employee dies before the 
employee's required beginning date, section 401(a)(9)(H)(i) provides 
that section 401(a)(9)(B)(ii) applies in certain cases by substituting 
10 years for 5 years and applies whether or not the employee dies 
before or after the employee's required beginning date. Accordingly, if 
an employee dies after the required beginning date, distributions to 
the employee's beneficiary for calendar years after the calendar year 
in which the employee died must satisfy section 401(a)(9)(B)(i) as well 
as section 401(a)(9)(B)(ii). In order to satisfy both of these 
requirements, the regulations provide for the same calculation of the 
annual required minimum distribution that was adopted in the 2002 final 
regulations but with an additional requirement that a full distribution 
of the employee's entire interest in the plan be made upon the 
occurrence of certain designated events (discussed in section I.E.3.c 
of this Summary of Comments and Explanation of Revisions).
    Several commenters requested that the final regulations eliminate 
the requirement for continued annual distributions if an employee dies 
on or after the employee's required beginning date. The commenters set 
forth an interpretation of section 401(a)(9)(H) under which, if an 
employee dies on or after the employee's required beginning date, the 
10-year rule described in section 401(a)(9)(B)(ii) (as modified by 
section 401(a)(9)(H)(i)) applies in lieu of the ``at least as rapidly'' 
rule described in section 401(a)(9)(B)(i). Commenters also asserted 
that requiring continued annual distributions adds complexity to the 
regulations (in that the beneficiary would have to know whether the 
employee died before or after the employee's required beginning date to 
apply this rule).
    The final regulations do not eliminate the requirement for 
continued annual distributions if an employee dies on or after the 
employee's required beginning date. The Treasury Department and the IRS 
do not think that the commenters' interpretation is consistent with a 
plain reading of the statute. Instead, the Treasury Department and the 
IRS have determined that section 401(a)(9)(B)(i) and (ii) both apply if 
an employee dies after the employee's required beginning date (unless 
the designated beneficiary is an eligible designated beneficiary taking 
life expectancy payments under section 401(a)(9)(B)(iii)). Read 
together, those provisions generally require annual distributions to 
continue while also requiring full distribution of the employee's 
interest in the plan by the end of the calendar year that includes the 
tenth anniversary of the date of the employee's death.
    The Treasury Department and the IRS have also concluded that the 
overarching policy of section 401(a)(9) and the amendments made by 
section 401 of the SECURE Act support the interpretation in these 
regulations. Since it was first added to the Code, section 401(a)(9) 
has always included the concept of a required beginning date, under 
which, once required minimum distributions began to either an employee 
or designated beneficiary, they were required to continue until the 
employee's entire interest under the plan was fully distributed, and 
these regulations retain this requirement. There is little indication 
in section 401 of the SECURE Act to suggest that Congress intended to 
allow distributions of an employee's account to temporarily cease for 
up to 9 years once annual required minimum distributions have begun. 
Moreover, the requirement to continue annual distributions does not 
increase complexity (in that this

[[Page 58897]]

requirement merely retains the rules that were in place before the 
addition of section 401(a)(9)(H), but subject to the full distribution 
requirement described in section I.E.3.c of this Summary of Comments 
and Explanation of Revisions).
    The proposed regulations provided a similar requirement to continue 
annual distributions for 10 years if an eligible designated beneficiary 
who was taking life expectancy payments dies or if an eligible 
designated beneficiary who is a minor child of the employee and who was 
taking life expectancy payments reaches the age of majority. Commenters 
raised similar concerns regarding this requirement. For the reasons 
described in the preceding paragraph, these regulations retain this 
requirement for continued annual distributions for up to 10 years 
after: (1) the death of an eligible designated beneficiary who was 
taking life expectancy payments; or (2) the attainment of the age of 
majority (in the case of an eligible designated beneficiary who was a 
minor child of the employee taking life expectancy payments).
    While the final regulations do not eliminate the annual 
distribution requirement in cases in which annual life expectancy 
payments have begun, the Treasury Department and the IRS issued Notice 
2022-53, 2022-45 IRB 437, Notice 2023-54, 2023-31 IRB 382, and Notice 
2024-35, 2024-19 IRB 1051, in response to comments requesting 
transition relief for this requirement. Under those notices, if a 
distribution would have been required to be made to certain 
beneficiaries under these regulations had they applied before January 
1, 2025, then: (1) a plan will not fail to be qualified for failing to 
make that distribution in 2021, 2022, 2023, or 2024; and (2) the 
taxpayer who failed to take the distribution will not be assessed an 
excise tax for failing to do so.\11\ This relief applies with respect 
to a beneficiary who is a designated beneficiary of an employee who 
died in 2020, 2021, 2022, or 2023, and after the employee's required 
beginning date, provided that the beneficiary was not an eligible 
designated beneficiary who used the lifetime or life expectancy 
payments exception under section 401(a)(9)(B)(iii). Those notices also 
provided comparable relief for the case in which an eligible designated 
beneficiary who was taking annual life expectancy payments died in 
2020, 2021, 2022, or 2023, and that beneficiary's successor beneficiary 
failed to take a distribution in 2021, 2022, 2023, or 2024.
---------------------------------------------------------------------------

    \11\ This relief does not require taxpayers to make up missed 
required minimum distributions nor does it permit taxpayers to 
extend the 10-year deadline by which a full distribution is required 
to be made. For example, if an employee died in 2020, then in 2025, 
there are six years remaining in the 10-year period without regard 
to whether the designated beneficiary took distributions in 2021, 
2022, 2023, or 2024. In 2030, the designated beneficiary must take a 
distribution of the remaining account balance.
---------------------------------------------------------------------------

b. Determination of Applicable Denominator
    If an employee died on or after the required beginning date (or the 
employee died before the required beginning date and the employee's 
eligible designated beneficiary is taking life expectancy distributions 
in accordance with section 401(a)(9)(B)(iii) and these regulations), 
then for calendar years after the calendar year in which the employee 
died, the applicable denominator generally is the remaining life 
expectancy of the designated beneficiary.\12\ The beneficiary's 
remaining life expectancy generally is calculated using the age of the 
beneficiary in the year following the calendar year of the employee's 
death, reduced by one for each subsequent calendar year.
---------------------------------------------------------------------------

    \12\ In the case of an employee who died on or after the 
employee's required beginning date, the designated beneficiary may 
use the employee's remaining life expectancy if it is longer than 
the beneficiary's remaining life expectancy.
---------------------------------------------------------------------------

    However, as an exception to these general rules, if the employee's 
spouse is the employee's sole beneficiary, then the applicable 
denominator during the spouse's lifetime is the spouse's life 
expectancy (which reflects an annual recalculation in accordance with 
section 401(a)(9)(D)). The final regulations clarify that in this case, 
for calendar years after the calendar year in which the spouse died, in 
determining the required minimum distribution to the spouse's 
beneficiary, the applicable denominator is the spouse's life expectancy 
calculated using the spouse's age as of the spouse's birthday in the 
calendar year in which the spouse died, reduced by one for each 
subsequent calendar year.
    The final regulations reflect the amendments made to section 
401(a)(9)(B)(iv) by section 327 of the SECURE 2.0 Act under which a 
surviving spouse who is the sole beneficiary of the employee may elect 
to be treated as the employee for certain purposes. However, the rules 
relating to this election are reserved in these final regulations and 
included in a notice of proposed rulemaking (REG-103529-23) in the 
Proposed Rules section of this issue of the Federal Register.
c. Full Distribution Required in Certain Circumstances
    Under the proposed regulations, if an employee's interest is in a 
defined contribution plan to which section 401(a)(9)(H) applies, in 
order to satisfy the 5-year rule of section 401(a)(9)(B)(ii) (or, if 
applicable, the exception to that rule in section 401(a)(9)(B)(iii), 
taking into account section 401(a)(9)(E)(iii) and (H)), then the 
employee's entire interest in the plan must be distributed by the 
earliest of the following dates:
    (1) The end of the tenth calendar year following the calendar year 
in which the employee died if the employee's designated beneficiary is 
not an eligible designated beneficiary;
    (2) The end of the tenth calendar year following the calendar year 
in which the designated beneficiary died if the employee's designated 
beneficiary was an eligible designated beneficiary;
    (3) The end of the tenth calendar year following the calendar year 
in which the beneficiary reaches the age of majority if the employee's 
designated beneficiary is the child of the employee who had not yet 
reached the age of majority as of the date of the employee's death; or
    (4) The end of the calendar year in which the applicable 
denominator would have been less than or equal to one if it were 
determined using the beneficiary's remaining life expectancy, if the 
employee's designated beneficiary is an eligible designated 
beneficiary, and if the applicable denominator is determined using the 
employee's remaining life expectancy.
    The final regulations generally retain these full distribution 
requirements (with minor language changes clarifying those 
requirements). However, consistent with requests made by commenters, 
the regulations remove the requirement for a full distribution by the 
end of the calendar year in which the applicable denominator would have 
been less than or equal to one if it were determined using the 
beneficiary's remaining life expectancy (which would have applied in 
the case of a designated beneficiary who was older than the employee). 
Accordingly, in the case of an eligible designated beneficiary who was 
born before the employee, if that beneficiary is taking distributions 
over the employee's remaining life expectancy, then a full distribution 
is not required until the calendar year in which the applicable 
denominator is less than or equal to one.
d. Multiple Designated Beneficiaries
    The proposed regulations provided that if the employee has more 
than one designated beneficiary then the

[[Page 58898]]

applicable denominator is determined using the life expectancy of the 
oldest designated beneficiary. Under the proposed regulations, whether 
a full distribution is required also generally is determined using the 
oldest of the designated beneficiaries.
    The proposed regulations provided certain exceptions to these 
general rules for multiple designated beneficiaries. Under one 
exception, if the employee's beneficiary is an applicable multi-
beneficiary trust, then only the disabled and chronically ill 
beneficiaries of the trust are taken into account in determining the 
oldest designated beneficiary. Under a second exception, if any of the 
employee's designated beneficiaries was a child of the employee who had 
not yet reached the age of majority as of the date of the employee's 
death, then, in applying the requirement to make a full distribution by 
the tenth year following the death of the oldest eligible designated 
beneficiary, only the employee's children who are designated 
beneficiaries and who are under the age of majority as of the 
employee's date of death were taken into account. Thus, in a situation 
involving one or more designated beneficiaries who are children of the 
employee under the age of majority as of the date of the employee's 
death and one or more older designated beneficiaries, the death of an 
older designated beneficiary would not result in a requirement to pay a 
full distribution before the oldest of those children attains the age 
of majority plus 10 years.\13\
---------------------------------------------------------------------------

    \13\ This rule works in conjunction with the rule in Sec.  
1.401(a)(9)-4(e)(2)(ii), which provides that if any of the 
employee's designated beneficiaries is an eligible designated 
beneficiary because the beneficiary is the child of the employee who 
had not reached the age of majority at the time of the employee's 
death, then the employee is treated as having an eligible designated 
beneficiary even if the employee has other designated beneficiaries 
who are not eligible designated beneficiaries. Thus, if the employee 
has both an eligible designated beneficiary who is a minor child of 
the employee and an older designated beneficiary, annual 
distributions may continue until the minor child reaches the age of 
majority plus 10 years.
---------------------------------------------------------------------------

    One commenter raised the concern that, if two of the employee's 
children are eligible designated beneficiaries, the rules in the 
proposed regulations would result in a requirement to pay the balance 
of the employee's account upon the attainment of the age of majority 
plus 10 years by the older of those children. To address this 
situation, the final regulations provide that, in the case described in 
this paragraph, a full distribution is not required until ten years 
after the youngest of the employee's children who are designated 
beneficiaries attains the age of majority (or, if earlier, ten years 
after the last of those minor children dies).
4. Treatment of Designated Roth Accounts
    These final regulations provide that, in accordance with section 
325 of the SECURE 2.0 Act, when determining the account balance subject 
to section 401(a)(9) of the Code for distribution calendar years up to 
and including the calendar year including the employee's date of death, 
amounts held by the employee in a designated Roth account (as described 
in section 402A(b)(2)) are not taken into account. These regulations 
reserve a paragraph for rules regarding how distributions from a 
designated Roth account are treated for purposes of section 401(a)(9) 
that are included in a notice of proposed rulemaking (REG-103529-23) in 
the Proposed Rules section of this issue of the Federal Register.
5. Disregard of Certain Distributions
    The proposed regulations updated the list of amounts of 
distributions and deemed distributions that are not taken into account 
in determining whether the required minimum distribution has been made 
for a calendar year. Under the proposed regulations, that list was 
implemented by a cross-reference to a list of amounts in proposed Sec.  
1.402(c)-2(c)(3) (relating to amounts that are not treated as eligible 
rollover distributions). The effect of the new cross-reference was to 
add the following items to the list of amounts that are disregarded for 
purposes of determining whether the required minimum distribution has 
been made from a defined contribution plan: prohibited allocations that 
are treated as deemed distributions pursuant to section 409(p); 
distributions of premiums for health and accident insurance under Sec.  
1.402(a)-1(e)(1)(i); amounts treated as distributed with respect to 
collectibles pursuant to section 408(m); and distributions that are 
permissible withdrawals from an eligible automatic contribution 
arrangement within the meaning of section 414(w).
    These exclusions are reflected in the final regulations with minor 
language changes. However, consistent with requests made by commenters, 
the final regulations clarify that the disregard for a distribution of 
premiums for health and accident insurance does not include a 
distribution described in section 402(l) (that is, certain 
distributions with respect to eligible retired public safety officers 
from governmental plans that are used to pay qualified health insurance 
premiums).
    The final regulations reserve a paragraph for the treatment of a 
corrective distribution under section 4974(e) (that is, a distribution 
of a prior year's missed required minimum distribution within the 
statutory correction window that results in a reduction in the excise 
tax rate for the missed required minimum distribution) or Sec.  
54.4974-1(g)(2) (relating to the automatic waiver of the excise tax for 
a missed required minimum distribution for the year of an individual's 
death). These rules are included in a notice of proposed rulemaking 
(REG-103529-23) in the Proposed Rules section of this issue of the 
Federal Register.

F. Section 1.401(a)(9)-6--Required Minimum Distributions From Defined 
Benefit Plans and Annuity Contracts

    Section 1.401(a)(9)-6 provides rules for required minimum 
distributions from defined benefit plans and from annuity contracts 
(including annuity contracts that are used to pay benefits under a 
defined contribution plan). These rules are based on the 2004 final 
regulations and are updated to reflect the amendments to section 
401(a)(9) of the Code made by various provisions of the SECURE 2.0 Act.
1. Rules Applicable to Defined Benefit Plans
    The proposed regulations, like the 2004 final regulations, 
reflected the exceptions from the requirements of section 
401(a)(9)(C)(ii) and (iii) provided under section 401(a)(9)(C)(iv) for 
governmental plans and church plans. Section 401(a)(9)(C)(iv) specifies 
that for purposes of these exceptions, a church plan is a plan 
maintained by a church for church employees, and the term church means 
any church as defined in section 3121(w)(3)(A) or any qualified church-
controlled organization as defined in section 3121(w)(3)(B). The 
proposed regulations provided that, for this purpose, the determination 
of whether an employee is a church employee is made without regard to 
section 414(e)(3)(B).
    One commenter requested that the final regulations provide that the 
rules under section 414(e)(3)(B) that treat certain individuals as 
employees of a church apply generally for the purposes of determining 
whether a plan is maintained for church employees under section 
401(a)(9)(C)(iv). The Treasury Department and the IRS determined that 
such a rule would yield an inappropriate result in the case of a plan 
for employees of a tax-exempt organization that is associated with a 
church unless the organization is a qualified church-controlled

[[Page 58899]]

organization. However, it would be appropriate to treat a plan for 
self-employed individuals who are licensed ministers of a church as a 
plan maintained by a church for employees of a church. Accordingly, 
these regulations provide that the determination of whether an 
individual is an employee of a church or qualified church-controlled 
organization is made in accordance with the rules of section 
414(e)(3)(B) other than section 414(e)(3)(B)(ii). Thus, a licensed 
minister who is self-employed but is treated as an employee of a church 
under section 414(e)(3)(B)(i) is considered an employee of a church for 
purposes of section 401(a)(9)(C)(iv).
    The commenter also requested that the exception apply to a multiple 
employer plan covering employees of a church or a qualified church-
controlled organization that also covers other employees. These 
regulations do not adopt that rule. Instead, they provide that a plan 
is excepted from the actuarial increase requirement only if at least 85 
percent of the individuals covered by the plan are employees of a 
church or a qualified church-controlled organization. Thus, if the 
employees in the plan who are not employees of a church or a qualified 
church-controlled organization constitute more than 15 percent of the 
covered employees, then the plan is not treated as a church plan that 
is exempted from the requirement under section 401(a)(9)(C)(iii) to 
provide an actuarial increase. However, these regulations provide that 
this actuarial increase requirement does not apply to benefits accrued 
by an individual that are attributable to service the individual 
performs as an employee of a church or a qualified church-controlled 
organization (including service performed as an employee described in 
section 414(e)(3)(B)(i)).
    Another commenter asked whether the requirement to apply an 
actuarial increase applies to benefits that are not vested. These 
regulations provide that the actuarial increase applies to benefits 
that are accrued but treat benefits that are not vested as accruing 
when they become vested. Accordingly, benefits that are not vested are 
not required to be actuarially increased until they become vested.
2. Applicability of Section 401(a)(9)(H) to Annuity Contracts
    One commentor noted that the language in Sec.  1.401(a)(9)-5(a)(5) 
of the proposed regulations requiring that an annuity contract 
purchased under a defined contribution plan satisfy the requirements of 
Sec.  1.401(a)(9)-5(e) (implementing the requirements of section 
401(a)(9)(E)(iii), (H)(ii) and (iii) that the employee's entire 
interest be distributed by the end of a specified calendar year) was 
not clear (in that the rule in Sec.  1.401(a)(9)-5(e) of the proposed 
regulations referred to the situation in which an employee's benefit is 
in the form of an individual account). The final regulations clarify 
that, if an annuity contract is purchased under a defined contribution 
plan, or the annuity contract is otherwise subject to section 
401(a)(9)(H), then payments under that annuity contract are not 
permitted to extend past the calendar year described in Sec.  
1.401(a)(9)-5(e).\14\
---------------------------------------------------------------------------

    \14\ One commenter asked for clarification of whether section 
401(a)(9)(H) applies in the case of an annuity provided under a 
defined benefit plan that is attributable to a direct rollover from 
a defined contribution plan (as described in Rev. Rul. 2012-4, 2012-
8 IRB 386). In that case, because the annuity is provided under a 
defined benefit plan, it is not subject to section 401(a)(9)(H).
---------------------------------------------------------------------------

    Several commenters observed that, as of the annuity starting date, 
a participant may have elected to receive a joint and survivor annuity 
benefit under an annuity contract with the spouse as survivor 
annuitant, and that the participant and spouse may divorce after the 
annuity starting date. Commenters asserted that, in such a case, there 
should be no change in the terms of the annuity contract on account of 
the divorce (as would have been required under the proposed regulations 
if the former spouse were no longer considered to be a spouse and were 
not an alternate payee under a qualified domestic relations order 
(QDRO) issued in accordance with section 414(p) specifying that the 
former spouse is to be treated as the surviving spouse for purposes of 
the annuity contract). Consistent with these comments, the final 
regulations provide that, for a designated beneficiary who is a 
contingent annuitant under an annuity contract, the determination of 
whether that beneficiary is an eligible designated beneficiary is made 
as of the annuity starting date. Thus, if the employee elects a joint 
and survivor annuity with the employee's spouse as the contingent 
annuitant, and they divorce after the annuity starting date, then the 
former spouse who is a designated beneficiary and the contingent 
annuitant under the contract is treated as an eligible designated 
beneficiary without regard to whether there is a QDRO. This approach is 
consistent with the requirements of rules of sections 401(a)(11) and 
417, and Sec.  1.401(a)-20, Q&A-25(b)(3), under which the spouse as of 
the annuity starting date continues to be entitled to a qualified joint 
and survivor annuity elected under the plan if the participant and the 
spouse divorce after the annuity starting date.
3. Increasing Payments
    Similar to the 2004 final regulations, the proposed regulations 
provided that all payments under a defined benefit plan or annuity 
contract must be nonincreasing, subject to a number of exceptions. The 
proposed regulations retained the exceptions in the 2004 final 
regulations and added further exceptions under which annuity payments 
under a defined benefit plan or annuity contract may increase. Under 
the proposed regulations, the permitted increases in annuity payments 
were different for defined benefit plans and annuity contracts issued 
by insurance carriers. In the case of an annuity contract, certain of 
the exceptions to the nonincreasing rule in the proposed regulations 
applied only if the total future expected payments under the contract 
exceed the total value being annuitized (that is, the value of the 
employee's entire interest being annuitized).
    One commenter requested that each of the annuity payment increases 
permitted under a defined benefit plan (such as a fixed percentage 
increase in annuity payments that is less than 5 percent) be permitted 
for annuity contracts without regard to the condition that the total 
future expected payments exceed the total value being annuitized. 
Consistent with this comment, and in accordance with section 
401(a)(9)(J)(i) (as added to the Code by section 201 of the SECURE 2.0 
Act), these regulations provide that the permitted increases in annuity 
payments under a defined benefit plan generally are also available 
under an annuity contract and eliminate the condition on increases 
under an annuity contract that the total future expected payments under 
the contract exceed the total value being annuitized. Thus, the 
permitted increases in annuity payments under an annuity contract are 
expanded under the regulations to include increases by a constant 
percentage, applied not less frequently than annually, at a rate that 
is less than 5 percent per year. However, consistent with the 
simplification of the permitted annuity increases under section 
401(a)(9)(J), an increase of 5 percent or more per year is not 
permitted for an annuity contract under the final regulations, even if 
the annuity payments could have met the condition for that increase 
under the 2004 regulations.
    These regulations also include modifications to the permitted 
increases for annuity contracts to reflect the

[[Page 58900]]

addition of section 401(a)(9)(J)(ii) through (iv) to the Code. Thus, 
the following increases in annuity payments are permitted: (1) an 
increase as a result of the shortening of the payment period with 
respect to the annuity or a full or partial commutation of the future 
annuity payments, provided that the amount of the payment pursuant to 
the commutation is determined using reasonable actuarial methods and 
assumptions, as determined in good faith by the issuer of the contract; 
\15\ (2) a payment of an amount that is in the nature of a dividend, 
provided that the issuer of the contract uses reasonable actuarial 
methods and assumptions, as determined in good faith, when calculating 
the initial annuity payments, the issuer's experience with respect to 
those factors, and the amount of the dividend or similar payment; and 
(3) a final payment upon death that does not exceed the amount by which 
the total consideration paid for the contract exceeds the aggregate 
amount of prior distributions under the contract.
---------------------------------------------------------------------------

    \15\ This commutation may be needed to comply with the 
requirement that, if the employee's designated beneficiary is not an 
eligible designated beneficiary, then payments under the annuity 
contract may not extend beyond the calendar year that includes the 
tenth anniversary of the date of the employee's death.
---------------------------------------------------------------------------

    In addition, these regulations provide rules that apply if the 
annuity contract purchased under a defined benefit plan is merely 
providing the same benefits that would have been payable under the 
defined benefit plan if an annuity contract had not been purchased.\16\ 
In that case, the annuity contract is permitted to have the same 
increases in annuity payments as under the qualified defined benefit 
rules. This could occur, for example, if an annuity contract is 
purchased under a terminating defined benefit plan.
---------------------------------------------------------------------------

    \16\ The final regulations also make a change to Sec.  
1.401(a)(9)-6(d) to broaden the applicability of the annuity rules 
by removing the requirement that an annuity be purchased with the 
employee's benefit under the plan.
---------------------------------------------------------------------------

    One commenter requested additional guidance as to whether section 
401(a)(9) prohibits a plan from offering a period of time during which 
a participant or beneficiary may elect to receive a lump sum payment 
instead of future annuity payments. These regulations do not address 
this issue. As described in Notice 2019-18, 2019-13 IRB 915, the 
Treasury Department and the IRS will continue to study the issue of 
retiree lump sum windows. This study will take into account the 
enactment of section 342 of the SECURE 2.0 Act.
4. Qualifying Longevity Annuity Contracts
    In 2014, the Treasury Department and the IRS amended the 
regulations under section 401(a)(9) to provide special rules that apply 
if a deferred annuity that commences annuity payments at an advanced 
age is purchased with a portion of the employee's interest under a 
defined contribution plan. See 79 FR 37633. Under those rules, if the 
annuity contract satisfies certain requirements, then the contract is a 
QLAC and the value of that QLAC is excluded from the account balance 
under the plan. Those requirements include that: (1) distributions 
commence not later than age 85; (2) the premiums paid with respect to 
all contracts intended to be QLACs not exceed an inflation-adjusted 
$125,000 (dollar limitation) or 25 percent of the employee's account 
balance (percentage limitation); and (3) the contract not make 
available any commutation benefit, cash surrender value, or other 
similar feature.
    The proposed regulations retained these premium limitations for 
QLAC status. However, in accordance with section 202(a)(1) and (2) of 
the SECURE 2.0 Act, the final regulations eliminate the percentage 
limitation and increase the initial amount of the inflation-adjusted 
dollar limitation from $125,000 to $200,000. These higher limits apply 
to an annuity contract that was purchased before December 29, 2022, and 
that satisfied the requirements to be a QLAC as of that date. Thus, the 
contract need not be exchanged for another annuity contract on or after 
that date in order for the employee to take advantage of the higher 
premium limits under section 202(a)(1) and (2) of the SECURE 2.0 Act.
    The proposed regulations included an exception to the requirement 
that the contract not include any commutation benefit, cash surrender 
value, or similar feature by permitting such a feature before the 
required beginning date. This change was proposed so that if a plan's 
investment options include a series of target date funds to which the 
relief under Notice 2014-66, 2014-46 IRB 820, applies,\17\ those target 
date funds could include QLACs among their assets. Commenters observed 
that some State laws prohibit the purchase of an annuity contract that 
does not provide for a right to rescind the contract within a specified 
short period of time and requested that such a rescission right be 
accommodated for a QLAC. Consistent with this comment and as instructed 
by section 202(a)(4) of the SECURE 2.0 Act, the final regulations add 
an exception under which the contract may provide a right to rescind 
the contract within a period not exceeding 90 days after purchase.
---------------------------------------------------------------------------

    \17\ Notice 2014-66 provides relief under section 401(a)(4) of 
the Code to enable plans to provide lifetime income by offering, as 
investment options, a series of target date funds that include 
deferred annuities among their assets, even if some of the target 
date funds within the series are available only to older 
participants.
---------------------------------------------------------------------------

    One commenter asked how an issuer of a QLAC should report that a 
taxpayer utilized the option to commute a contract before the required 
beginning date. The final regulations do not modify the reporting 
required under Sec.  1.6047-2 and do not provide for a reversal of any 
premiums previously paid for a contract that is commuted prior to the 
required beginning date or rescinded within a short period after 
purchase. This is because the purpose of these exceptions is to 
accommodate the possibility that the contract will permit the 
commutation or recission and not to accommodate an employee who chooses 
to commute or rescind the contract and later decides to purchase 
another QLAC.
    The proposed regulations provided that, for purposes of applying 
the limitation on premiums used to purchase a QLAC, if another 
insurance contract is exchanged for a QLAC then the fair market value 
of the exchanged contract will be treated as a premium paid for the 
QLAC. One commenter suggested that if an insurance contract is 
surrendered for its cash surrender value, the surrender extinguishes 
all benefits and other characteristics of the contract, and the cash is 
used to purchase a QLAC, then only the cash from the surrendered 
contract should be treated as a premium paid for the QLAC. These 
regulations include that modification to the rule.
    One commenter asked for continued treatment of a former spouse as a 
spouse if the participant and spouse divorce after the QLAC is 
purchased but before the annuity starting date in the absence of a QDRO 
providing for this treatment. Consistent with this comment and as 
instructed in section 202(a)(3) of the SECURE 2.0 Act, these final 
regulations provide that the payment of survivor benefits to the 
employee's former spouse under an annuity contract will not cause the 
contract to fail to satisfy the requirements to be treated as a QLAC 
merely because the divorce between the employee and that former spouse 
occurred after the contract is purchased, provided that a QDRO 
satisfying certain requirements has been issued in connection with the 
divorce.
    Specifically, the QDRO must: (1) provide that the former spouse is 
entitled to the survivor benefits under the contract; (2) provide that 
the former

[[Page 58901]]

spouse is treated as a surviving spouse for purposes of the contract; 
(3) not modify the treatment of the former spouse as the beneficiary 
under the contract who is entitled to the survivor benefits; or (4) not 
modify the treatment of the former spouse as the measuring life for the 
survivor benefits under the contract.\18\
---------------------------------------------------------------------------

    \18\ The Treasury Department and the IRS remind taxpayers that 
in the case of a QDRO that does not provide that either the former 
spouse is entitled to the survivor benefits under the contract or 
that the former spouse is treated as a surviving spouse for purposes 
of the contract, there is a risk that the spousal rights rules of 
sections 401(a)(11) and 417 will be violated if the employee 
remarries.
---------------------------------------------------------------------------

    Section 202(a)(3) of the SECURE 2.0 Act provides for a comparable 
rule in the case of a plan not subject to the QDRO rules of section 
414(p) of the Code or section 206(d) of the Employee Retirement Income 
Security Act of 1974, Public Law 93-406, 88 Stat. 829, as amended 
(ERISA). These regulations reserve a paragraph for this comparable 
rule, which is included in a notice of proposed rulemaking (REG-103529-
23) in the Proposed Rules section of this issue of the Federal 
Register.

G. Section 1.401(a)(9)-7--Rollovers and Transfers

    As was the case for the proposed regulations, Sec.  1.401(a)(9)-7 
retains the rollover and transfer rules that are in the 2002 final 
regulations.

H. Section 1.401(a)(9)-8--Special Rules

    Section 1.401(a)(9)-8 provides special rules applicable to 
satisfying the minimum distribution requirement.
    The proposed regulations retained the rules from the 2002 final 
regulations under which section 401(a)(9) may be applied separately 
with respect to the separate interests of each of the employee's 
beneficiaries under a plan. The final regulations clarify that the 
separate application of section 401(a)(9) only applies for calendar 
years after the death of the employee (and thus, does not apply for the 
calendar year of the employee's death) and adds expenses to the list of 
items that must be allocated in a reasonable and consistent manner 
among the separate accounts.
    The final regulations also restore flexibility from Sec.  
1.401(a)(9)-5 in the 2002 final regulations relating to the required 
minimum distribution for the calendar year of the employee's death by 
providing that a required minimum distribution must be paid to ``any 
beneficiary'' in the year of death rather than to ``the beneficiary.'' 
Thus, for example, if an employee who is required to take a 
distribution in a calendar year dies before taking that distribution 
and has named more than one designated beneficiary, then any of those 
beneficiaries can satisfy the employee's requirement to take a 
distribution in that calendar year (as opposed to each of the 
beneficiaries being required to take a proportional share of the unpaid 
amount).
    The proposed regulations generally retained the separate account 
rules applicable to beneficiaries after the death of the employee that 
were adopted in the 2002 final regulations, including the rule that 
prohibits separate application of section 401(a)(9) to separate 
interests in a trust. However, in light of the enactment of special 
rules that apply to an applicable multi-beneficiary trust described in 
section 401(a)(9)(H)(iv)(I) (a trust with at least one disabled or 
chronically ill beneficiary that provides that it is to be immediately 
divided upon the death of the employee into separate trusts for each 
beneficiary), the proposed regulations provided an exception to that 
prohibition that would permit separate application of section 401(a)(9) 
to those separate trusts.
    Consistent with requests made by commenters, the final regulations 
expand the exception in the proposed regulations to permit separate 
application of section 401(a)(9) to the separate interests of 
beneficiaries of a see-through trust if certain requirements are met. 
This exception applies to the separate interests of beneficiaries of a 
see-through trust if the terms of that trust provide that it is to be 
divided immediately upon the death of the employee into separate shares 
for one or more trust beneficiaries (without regard to whether any of 
the beneficiaries are disabled or chronically ill).
    For this purpose, the final regulations provide that a trust is 
divided immediately upon the death of the employee into separate shares 
for one or more trust beneficiaries only if the trust is terminated, 
the separate interests of the trust beneficiaries are held in separate 
trusts, and there is no discretion as to the extent to which the 
separate trusts will be entitled to receive post-death distributions 
attributable to the employee's interest in the plan. In addition, the 
final regulations clarify that a trust does not fail to be divided 
immediately upon the death of the employee merely because there are 
administrative delays between the date of the employee's death and the 
date on which the trust actually is divided and terminated provided 
that any amounts received by the trust during this period are allocated 
as if the trust had been divided on the date of the employee's death.

II. Section 402(c) Regulations

    The proposed regulations provided updates to existing rules of 
Sec.  1.402(c)-2 that reflect certain statutory amendments made to 
section 402(c) since the regulations were issued in 1995. Those 
amendments are described in the Background section of this preamble 
under the heading Section 402(c)--Rollovers.

A. Special Rule for Certain Distributions to Surviving Spouses

    The proposed regulations provided a new rule to limit the ability 
of a surviving spouse to use the 5-year rule or the 10-year rule to 
defer distributions beyond the calendar year that annual distributions 
would have been required to commence and then, after that calendar 
year, commence annual distributions. This rule, which applied in 
limited circumstances, would have been used to determine, with respect 
to a distribution to the employee's surviving spouse to whom the 5-year 
rule or 10-year rule applies, the portion of that distribution that is 
treated as a required minimum distribution under section 401(a)(9) (and 
thus is not an eligible rollover distribution). This special rule, 
which treated a portion of a distribution made before the last year of 
the 5-year or 10-year period (whichever applies to the spouse) as a 
required minimum distribution, applied if: (1) the distribution was 
made in or after the calendar year the surviving spouse attains age 72; 
and (2) the surviving spouse rolled over some or all of the 
distribution to an eligible retirement plan under which the surviving 
spouse is not treated as the beneficiary of the employee.
    Under this special rule, the portion of the distribution that is 
treated as a required minimum distribution was the cumulative total, 
over a span of years, of the hypothetical required minimum distribution 
for each year had the life expectancy rule applied (or, in the case of 
a defined benefit plan, had the annuity payment rule applied), reduced 
by any amounts actually distributed to the surviving spouse during that 
span of years. The span of years began with the first applicable year 
(defined as the later of the calendar year in which the surviving 
spouse reaches age 72 and the calendar year in which the employee would 
have reached age 72) and ended in the year of distribution.
    In calculating the hypothetical required minimum distributions from 
a defined contribution plan for a calendar year under this special rule 
(the determination year), the proposed regulations provided that an 
adjusted

[[Page 58902]]

account balance would be used. The adjusted account balance for a 
calendar year was determined by reducing the account balance that 
normally would be used to determine the required minimum distribution 
for that determination year by the excess (if any) of: (1) the sum of 
the hypothetical required minimum distributions beginning with the 
first applicable year and ending with the calendar year preceding the 
calendar year of the determination, over (2) the distributions actually 
made to the surviving spouse during those calendar years.
    Several commenters requested that the final regulations eliminate 
the special rule for distributions to surviving spouses. In support of 
that request, commenters point to the absence of a similar rule in the 
statute (both pre- and post-SECURE Act). Commenters also argued that in 
the case of an individual with no financial advisor, determining the 
amount of the hypothetical required minimum distribution that is 
ineligible for rollover would be difficult because it requires complex 
calculations based on amounts actually distributed in prior years and 
reduced account balances for each year past what would have been the 
spouse's required beginning date that are based on the current account 
balance. Other commenters argued that plan administrators would not 
have the knowledge of whether a beneficiary was rolling over a 
distribution to their own IRA or to a beneficiary IRA and accordingly, 
what portion of that distribution is an eligible rollover distribution. 
As a result, the plan administrator would not know the proper 
withholding amount for the distribution.
    The final regulations do not eliminate this special rule. The 
Treasury Department and the IRS concluded that this rule will prevent a 
spouse who will be taking annual distributions from effectively 
delaying the commencement of those distributions for a number of years 
beyond the spouse's required beginning date (or, if later, the year in 
which the employee would have reached the applicable age). The 
regulations accomplish this result by requiring the spouse to catch up 
on distributions that would have been made had the spouse been taking 
annual life expectancy payments starting in the year the spouse reached 
the applicable age (or, if later, the year in which the employee would 
have reached the applicable age). While there was no similar rule in 
effect prior to the enactment of section 401(a)(9)(H), the potential 
number of years that the commencement of life expectancy distributions 
may be delayed is much higher as a result of the expansion of the 5-
year rule into a 10-year rule.
    Although this special rule is not eliminated, to reflect that it is 
intended only to prevent the lengthened delay in commencement that 
resulted from the expansion of the 5-year rule into a 10-year rule, the 
final regulations provide that this rule does not apply in the case of 
a surviving spouse who is subject to the 5-year rule. Accordingly, this 
rule will apply only in the case of surviving spouse who is the 
beneficiary of an employee in a defined contribution plan. In addition, 
the final regulations provide that the hypothetical required minimum 
distribution is calculated assuming that the election described in 
Sec.  1.401(a)(9)-5(g)(3)(i) is in effect for that spouse.\19\
---------------------------------------------------------------------------

    \19\ Commenters requested an expansion of the numerical example 
of the application of the rules for determining the amount of a 
surviving spouse's distribution that is a required minimum 
distribution and therefore cannot be rolled over that were included 
in proposed Sec.  1.402(c)-2(j)(3)(iii) Because of the change to the 
calculation of the hypothetical required minimum distributions to 
assume that Sec.  1.401(a)(9)-5(g)(3)(i) is in effect for the 
surviving spouse, a paragraph is reserved for the example in these 
regulations, and the numerical example is included in a notice of 
proposed rulemaking (REG-103529-23) in the Proposed Rules section of 
this issue of the Federal Register.
---------------------------------------------------------------------------

    The final regulations also provide that plan administrators may 
make reasonable assumptions related to distributions to the surviving 
spouse. Specifically, a plan administrator may assume that a surviving 
spouse to whom this special rule applies will roll over only the 
portion of the distribution that is eligible for rollover (in 
accordance with this rule) to an eligible retirement plan under which 
that spouse is not treated as the beneficiary of the employee. Thus, a 
plan administrator may treat that portion of the distribution as an 
eligible rollover distribution for purposes of sections 401(a)(31) and 
3405(c). However, pursuant to Sec.  1.402(c)-2(k)(2), a surviving 
spouse may roll over the entire distribution to an individual 
retirement plan under which that spouse is treated as the beneficiary 
of the employee.

B. Distributions to Non-Spousal Beneficiaries

    Like the proposed regulations, these regulations provide that a 
designated beneficiary who is not a spouse may elect, under section 
402(c)(11), to have any portion of a distribution that fits within the 
definition of an eligible rollover distribution transferred via a 
direct trustee-to-trustee transfer to an IRA established for the 
purpose of receiving that distribution. If that transfer is made 
pursuant to section 402(c)(11), the distribution is treated as an 
eligible rollover distribution; the IRA is treated as an inherited 
account or annuity (as defined in section 408(d)(3)(C), so that 
distributions from the inherited IRA are not eligible to be rolled 
over); and the IRA is subject to section 401(a)(9)(B) (other than 
section 401(a)(9)(B)(iv)). Consistent with a request from a commenter, 
these regulations clarify that a see-through trust may be treated as a 
designated beneficiary for purposes of section 402(c)(11)(A).
    If the distribution is made directly to a beneficiary who is not 
the surviving spouse of the employee (instead of a direct trustee-to-
trustee transfer to an inherited IRA), then these regulations provide 
that the distribution is not an eligible rollover distribution for 
purposes of section 402(c)(4) (that is, it cannot be rolled over). 
However, in response to comments requesting clarity on the issue, these 
regulations provide that the distribution described in the preceding 
sentence is generally still subject to 20-percent withholding under 
section 3405(c) (which sets forth the withholding requirements for 
eligible rollover distributions as defined in section 402(f)(2)(A)). In 
this case, 20-percent withholding is required because section 
402(f)(2)(A) specifies that the term ``eligible rollover distribution'' 
has the same meaning as in section 402(c)(4) but also includes a 
distribution to a non-spouse designated beneficiary that would be 
treated as an eligible rollover distribution if the requirements of 
section 402(c)(11) were satisfied. Under this definition, the amount 
that would be an eligible rollover distribution if the requirements of 
section 402(c)(11) were satisfied excludes amounts treated as a 
required minimum distribution.

III. Section 403(b) Regulations

    The final regulations regarding section 403(b) plans are the same 
as proposed, except for a few changes. The final regulations clarify 
that the rule under which the minimum distribution requirements of 
section 401(a)(9) are applied to section 403(b) contracts in accordance 
with the provisions in Sec.  1.408-8 refers to the provisions in Sec.  
1.408-8 that apply to an IRA that is not a Roth IRA. With respect to a 
designated Roth account in a section 403(b) contract, the final 
regulations reflect the provisions of section 325 of the SECURE 2.0 Act 
under which no required minimum distributions are due from a designated 
Roth account during the lifetime of the employee. Under the final 
regulations, the rules of Sec.  1.401(a)(9)-3(a)(2) (which provides

[[Page 58903]]

that if an employee's entire interest under a defined contribution plan 
is in a designated Roth account, then the employee is treated as having 
died before the required beginning date), Sec.  1.401(a)(9)-5(b)(3) 
(which excludes amounts held in a designated Roth account from the 
employee's account balance during the employee's lifetime), and Sec.  
1.401(a)(9)-5(g)(2)(iii) (treatment of distributions from designated 
Roth accounts, which is reserved in these regulations) apply, rather 
than the rules of Sec.  1.408-8(b)(1)(ii) that apply to a Roth IRA. 
Lastly, the final regulations provide that the changes to Sec.  
1.403(b)-6 apply for purposes of determining required minimum 
distributions for calendar years beginning on or after January 1, 2025.
    In the preamble to the proposed regulations, the Treasury 
Department and the IRS requested comments on possible changes to the 
required minimum distribution rules for section 403(b) plans, so that 
they would more closely follow the required minimum distribution rules 
for qualified plans (as opposed to IRAs). Commenters made various 
suggestions in response to this request and requested that any of those 
changes not be implemented in these final regulations. The Treasury 
Department and IRS are considering these comments, and any further 
changes relating to the required minimum distribution rules for section 
403(b) plans will be set forth in separate guidance.

IV. Section 1.408-8--Distribution Requirements for IRAs

    These regulations amend Sec.  1.408-8 (which sets forth the 
required minimum distribution rules for IRAs) to implement the changes 
made to section 401(a)(9) under the SECURE Act and the SECURE 2.0 Act. 
Generally, the minimum distribution required from an individual 
retirement account is determined in accordance with the rules of Sec.  
1.401(a)(9)-5 and the minimum distribution required from an individual 
retirement annuity is determined in accordance with the rules of Sec.  
1.401(a)(9)-6 (including Sec.  1.401(a)(9)-6(d)(2)).
    Like the proposed regulations, these final regulations retain the 
rules from the 2002 regulations under which the required minimum 
distribution from one IRA is permitted to be distributed from another 
IRA in order to satisfy section 401(a)(9), subject to the certain 
restrictions involving inherited IRAs and Roth IRAs. To implement the 
statutory instruction under section 204(c) of the SECURE 2.0 Act, these 
final regulations provide that, subject to the same limitations that 
apply to aggregation of IRAs generally, an individual who holds an IRA 
that is an annuity contract described in section 408(b) may elect to 
aggregate that IRA with one or more IRAs with account balances that the 
individual holds and apply the optional aggregation rule of Sec.  
1.401(a)(9)-5(a)(5)(iv) (described in section I.E.2 of this Summary of 
Comments and Explanation of Revisions) with respect to the annuity 
contract and the account balances under those IRAs as if the account 
balances were the remaining account balances following the purchase of 
the annuity contract with a portion of those account balances.
    In addition, whether a designated beneficiary of an IRA owner is an 
eligible designated beneficiary and whether the beneficiaries of a 
trust are treated as beneficiaries of the IRA owner is generally 
determined in accordance with Sec.  1.401(a)(9)-4. Consistent with 
requests made by commenters, these regulations provide that, in 
determining whether an IRA owner's designated beneficiary is disabled 
or chronically ill within the meaning of Sec. Sec.  1.401(a)(9)-4(e)(4) 
and (5), respectively, or whether the beneficiaries of a trust are 
treated as beneficiaries of the IRA owner, the required documentation 
described in Sec.  1.401(a)(9)-4(e)(7), or Sec.  1.401(a)(9)-4(h), 
respectively, need not be provided to the IRA custodian, issuer, or 
trustee.
    The proposed regulations generally incorporated the rules in Notice 
2007-7, Q&As-17 and 19 (relating to the carryover of the method of 
determining required minimum distributions from a plan to a receiving 
IRA when a beneficiary is making a transfer described in section 
402(c)(11)) and extended those rules to provide comparable treatment to 
a surviving spouse. These rules relating to the distribution method of 
the receiving IRA did not apply to a surviving spouse when that spouse 
is rolling over a distribution to the spouse's own account in a 
qualified plan or to the spouse's own IRA (because distributions would 
then be made in accordance with section 401(a)(9)(A) instead of section 
401(a)(9)(B)). In that case, the proposed regulations provided that the 
amount of the distribution treated as a required minimum distribution, 
and thus not eligible to be rolled over, is determined in accordance 
with Sec.  1.402(c)-2(j) (including the rule under which in certain 
circumstances a spouse who elects the 10-year rule is required to treat 
a portion of any distribution as a required minimum distribution as 
described in section II.A of this Summary of Comments and Explanation 
of Revisions).
    To coordinate with the rules in Sec.  1.402(c)-2(j), the proposed 
regulations added a deadline for the election under which a surviving 
spouse may elect to treat a decedent's IRA as the spouse's own. 
Specifically, a surviving spouse must make that election by the later 
of (1) the end of the calendar year in which the surviving spouse 
reaches age 72, and (2) the end of the calendar year following the 
calendar year of the IRA owner's death. Under the proposed regulations, 
if the surviving spouse were to miss that deadline, the surviving 
spouse still would be permitted to roll over distributions to the 
spouse's own IRA but would be subject to the special rule on the catch-
up of hypothetical required minimum distributions described in section 
II of this Summary of Comments and Explanation of Revisions.
    Consistent with requests made by commenters, the final regulations 
eliminate the deadline described in the preceding paragraph. Instead, 
these regulations provide a timing rule that applies on a yearly basis 
and only if the special rule on the catch-up of hypothetical required 
minimum distributions would apply to the IRA owner's surviving spouse 
had a distribution been made directly to the surviving spouse in the 
calendar year. In addition, these regulations provide that, even if the 
timing rule otherwise applies, a surviving spouse may still make an 
election to treat an IRA as the surviving spouse's own IRA, but only if 
that election does not apply to amounts in the IRA that would be 
treated as required minimum distributions pursuant to Sec.  1.402(c)-
2(j)(4)(ii) had they been distributed in that calendar year. Thus, the 
election can be made only in a calendar year after the amounts treated 
as required minimum distributions under Sec.  1.402(c)-2(j)(4)(ii) for 
that calendar year have been distributed from the IRA.
    These regulations also clarify the rules for the beneficiaries of 
an owner of multiple IRAs that are aggregated for purposes of 
satisfying the required minimum distribution rules. The new rules apply 
in the case of an IRA owner who dies before taking the total required 
minimum distribution in a calendar year (that is, there is a shortfall) 
if the beneficiary designations with respect to all of those IRAs are 
not identical. In that case, each of the owner's IRAs is subject to a 
requirement to distribute a proportionate share of the shortfall to a 
beneficiary of that IRA. This allocation of the proportionate share of 
the shortfall to a particular IRA is made

[[Page 58904]]

without regard to whether some of the required minimum distribution for 
the calendar year was already made to the IRA owner from that IRA. 
Similar rules apply in the case of a beneficiary of multiple IRAs that 
are aggregated for purposes of satisfying the required minimum 
distribution rules if a required minimum distribution is due for the 
calendar year of the beneficiary's death to the extent that the amount 
was not distributed to the beneficiary.
    The proposed regulations provided that amounts that are treated as 
distributed pursuant to section 408(e) (relating to the loss of tax 
exemption when an IRA owner engages in a prohibited transaction or 
borrows any money under an individual retirement annuity, and the 
deemed distribution of amounts when an individual uses a portion of an 
individual retirement account as security for a loan) or amounts that 
are deemed to be distributed with respect to collectibles pursuant to 
section 408(m) may not be used to satisfy the required minimum 
distribution for a calendar year. Several commenters argued that final 
regulations should not exclude amounts treated as distributed under 
those sections for purposes of determining whether section 401(a)(9) 
has been satisfied. The commenters asserted that in this case, the IRA 
account balance could be zero and without any assets from which to take 
a required minimum distribution, the IRA owner would be required to pay 
an excise tax.
    The final regulations retain the rules from the proposed 
regulations with minor changes. However, the Treasury Department and 
the IRS remind taxpayers that, pursuant to Sec.  1.401(a)(9)-5(a)(1), 
the required minimum distribution amount will never exceed the entire 
account balance on the date of the distribution. Accordingly, because 
section 408(e)(2)(B) and (3) reduces an IRA owner's account balance to 
zero as of the first day of the taxable year, the required minimum 
distribution for that calendar year would also be zero. By contrast, 
section 408(e)(4) and (m) does not reduce an IRA owner's account 
balance by the deemed distribution and accordingly, the amount of the 
required minimum distribution for a calendar year is not affected by 
the deemed distribution. In that case, allowing the deemed distribution 
that results from the use of the IRA to secure a loan or to purchase a 
collectible to be used to satisfy the requirement to take a minimum 
distribution would reduce the deterrent effect of the statutorily 
specified tax consequence of those actions.
    The proposed regulations provided that the limitation on premiums 
paid for a QLAC purchased under an IRA is the lesser of a dollar 
limitation and a percentage limitation. The percentage limitation in 
the proposed regulations was 25-percent of the total of all IRA account 
balances that an individual holds as the IRA owner (other than Roth 
IRAs) as of December 31 of the calendar year preceding the date the 
premium payment is made. Several commenters requested changes that 
would address the issue of the percentage limitation in the case of a 
taxpayer who has no IRAs other than a newly established IRA that 
received a rollover from a qualified plan (because, in such a case, the 
IRA did not have an account balance as of December 31 of the prior 
calendar year and thus, the taxpayer would not be permitted to purchase 
a QLAC with the assets of the IRA until the year after the year of the 
rollover). However, section 202(a)(1) of the SECURE 2.0 Act eliminated 
the percentage limitation. Accordingly, these final regulations provide 
that the limitation on premiums is the dollar limitation provided for 
in section 202(a)(2) of the SECURE 2.0 Act ($200,000, adjusted for 
inflation).

V. Section 1.457-6(d)--Minimum Required Distributions for Eligible 
Plans

    Several comments were received asking whether the rules of section 
401(a)(9)(H) apply to an eligible deferred compensation plan of a tax-
exempt entity. Section 401(a)(9)(H)(vi) provides that all eligible 
retirement plans (as defined in section 402(c)(8)(B) (other than 
certain defined benefit plans)) are treated as defined contribution 
plans for purposes of applying the rules of section 401(a)(9)(H). This 
provision does not provide an exhaustive list of the plans that are 
treated as defined contribution plans for purposes of applying the 
rules of section 401(a)(9)(H). Accordingly, the final regulations 
clarify that, if an eligible deferred compensation plan is subject to 
the rules of Sec.  1.401(a)(9)-5, then the plan must also satisfy the 
rules of section 401(a)(9)(H) (without regard to whether the plan is 
maintained by a tax-exempt entity).

VI. Section 54.4974-1--Excise Tax on Accumulations in Qualified 
Retirement Plans

    The proposed regulations provided for an automatic waiver of the 
excise tax that applies in the case of an individual who had a minimum 
distribution requirement in a calendar year and died in that calendar 
year before satisfying that minimum distribution requirement. In this 
situation, a beneficiary of the individual must satisfy the minimum 
distribution requirement by the end of that calendar year. However, if 
that beneficiary fails to satisfy the minimum distribution requirement 
in that calendar year, then the proposed regulations provided that the 
excise tax for that failure is automatically waived provided that the 
beneficiary takes the missed required minimum distribution no later 
than the tax filing deadline (including extensions thereof) for the 
taxable year of that beneficiary that begins with or within that 
calendar year. Consistent with requests made by commenters, the final 
regulations extend the deadline for the beneficiary to take the missed 
required minimum distribution and be eligible for the automatic waiver. 
The new deadline is the later of the tax filing deadline for the 
taxable year of the beneficiary that begins with or within the calendar 
year in which the individual died and the end of the following calendar 
year.
    These regulations also reflect the amendments made to section 4974 
by section 302(a) of the SECURE 2.0 Act effective for taxable years 
beginning after December 29, 2022. In accordance with section 302(a) of 
the SECURE 2.0 Act, these regulations provide that the tax imposed by 
section 4974(a) of the Code generally is equal to 25 percent of the 
amount by which the required minimum distribution exceeds the actual 
amount distributed during the calendar year. In addition, these 
regulations reflect section 4974(e) (which was added to the Code by 
section 302(b) of the SECURE 2.0 Act) and provide that the excise tax 
is reduced to 10 percent in the case of a taxpayer who, by the last day 
of the correction window, receives a corrective distribution from the 
qualified retirement plan or eligible deferred compensation plan of the 
amount by which the required minimum distribution exceeds the actual 
amount distributed during the calendar year from that plan and submits 
a return reflecting the excise tax. For purposes of these regulations, 
the correction window ends on the earliest of: (1) the date a notice of 
deficiency under section 6212 with respect to the tax imposed by 
section 4974(a) is mailed; (2) the date on which the tax imposed by 
section 4974(a) is assessed; or (3) the last day of the second taxable 
year that begins after the end of the taxable year in which the tax 
under section 4974(a) is imposed.
    In addition, these final regulations provide that if the minimum 
distribution was required to be paid from a particular qualified 
retirement plan or eligible deferred compensation

[[Page 58905]]

plan, then the corrective distribution must be made from that 
particular qualified retirement plan or eligible deferred compensation 
plan. However, if the requirement to take a minimum distribution could 
have been satisfied by a payment from any one of a number of qualified 
retirement plans (such as an individual retirement account under 
section 408(a) or a section 403(b) plan), then the corrective 
distribution may be made from any one of those qualified retirement 
plans.

Applicability Dates

    Amended Sec. Sec.  1.401(a)(9)-1 through 1.401(a)(9)-9, 1.403(b)-
6(e), and 1.408-8 apply for purposes of determining required minimum 
distributions for calendar years beginning on or after January 1, 2025. 
Amended Sec.  1.402(c)-2 applies for distributions made on or after 
January 1, 2025. Amended Sec.  54.4974-1 applies for taxable years 
beginning on or after January 1, 2025. For earlier years, taxpayers 
must apply the preexisting final regulations, but taking into account a 
reasonable, good faith interpretation of the amendments made by 
sections 114 and 401 of the SECURE Act. Compliance with the proposed 
regulations will satisfy that requirement. For the 2023 and 2024 
distribution calendar years, taxpayers must also take into account a 
reasonable, good faith interpretation of the amendments made by 
sections 107, 201, 202, 204, and 337 of the SECURE 2.0 Act.

Special Analyses

I. Regulatory Planning and Review

    Pursuant to the Memorandum of Agreement, Review of Treasury 
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory 
actions issued by the IRS are not subject to the requirements of 
section 6 of Executive Order 12866, as amended. Therefore, a regulatory 
impact assessment is not required.

II. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) generally 
requires that a Federal agency obtain the approval of the Office of 
Management and Budget (OMB) before collecting information from the 
public, whether such collection of information is mandatory, voluntary, 
or required to obtain or retain a benefit. An agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless the collection of information displays a valid 
control number.
    These regulations include third-party disclosures and recordkeeping 
requirements, in Sec. Sec.  1.401(a)(9)-3(b)(4)(iii) and (c)(5)(iii), 
1.401(a)(9)-4(e)(7), and 1.401(a)(9)-4(h), that are required to 
determine whether a beneficiary is an eligible designated beneficiary 
entitled to distributions over the beneficiary's life expectancy and to 
record the names of the taxpayer's beneficiaries under the trust. These 
collections of information would generally be used by the IRS for tax 
compliance purposes and by plan administrators to facilitate compliance 
with the required minimum distribution requirements under section 
401(a)(9). The likely respondents to these collections are 
beneficiaries of employees participating in retirement plans (and, in 
limited circumstances, the participating employees).
    Sections 1.401(a)(9)-3(b)(4)(iii) and (c)(5)(iii) allow a plan to 
permit an eligible designated beneficiary in that plan to elect between 
the 5-year rule (or 10-year rule, if applicable) and life expectancy 
rule in the case of an employee who dies before the employee's required 
beginning date. This election only arises in the context of a plan (and 
not an IRA) because the plan administrator will need that information 
to satisfy the required minimum distribution requirements with respect 
to the beneficiary. An IRA custodian has no obligation to ensure 
compliance with the required minimum distribution rules, so there is no 
need for a beneficiary of an IRA to file any type of election with the 
custodian. Although the plan may provide that the employee may make 
this election, it is expected that more commonly, the employee's 
beneficiary will be the individual making the election. Moreover, the 
plan will have specified a default method of payment to the beneficiary 
in the absence of an election (so that the beneficiaries will not be 
required to make an election).
    Section 1.401(a)(9)-4(e)(7) requires a beneficiary to provide 
documentation to a plan administrator showing that the beneficiary was 
disabled or chronically ill as of the date of the employee's death. 
Typically, this requirement will be satisfied by having a licensed 
health care practitioner certify that the beneficiary was disabled or 
chronically ill in a statement that is provided to the plan 
administrator.
    Section 1.401(a)(9)-4(h) permits an employee who wants to name a 
trust as a beneficiary to treat the underlying beneficiaries of the 
trust as designated beneficiaries of the employee's benefit under a 
retirement plan if the employee (or the trustee of the trust) either: 
(1) provides a copy of the trust instrument to the plan administrator 
or (2) provides a list of all the beneficiaries of the trust, certifies 
that, to the best of the employee's (or trustee's) knowledge, this list 
is correct and complete, and agrees to provide a copy of the trust 
instrument upon demand. If the trust instrument is amended at any time 
in the future, the employee (or trustee) must, within a reasonable 
time, provide a copy of each such amendment, or provide corrected 
certifications to the extent that the amendment changes the information 
previously certified. This requirement must generally be satisfied no 
later than October 31 of the calendar year following the calendar year 
of the employee's death.
    The collections of information contained in this notice of final 
rulemaking have been submitted to the Office of Management and Budget 
for review in accordance with the Paperwork Reduction Act. The Treasury 
Department and the IRS solicited public comments during the proposed 
rulemaking at 87 FR 10504 on February 24, 2022. During the public 
comment period, the Treasury Department and the IRS did not receive any 
comments on the collections of information. Several commenters 
requested that plan administrators be permitted to rely on self-
certifications from a designated beneficiary (or, in the case of a see-
through trust, the trustee of that trust) that the beneficiary is 
disabled or chronically ill within the meaning of Sec.  1.401(a)(9)-
4(d). These final regulations do not adopt that rule for the reasons 
described in section I.D.1.c of the Summary of Comments and Explanation 
of Revisions. Commenters also requested that final regulations allow 
for a certification from the trustee of the trust as to the 
beneficiaries who are to be treated as beneficiaries of the employee 
for purposes of section 401(a)(9). These final regulations do not adopt 
that rule for the reasons described in section I.D.2.b of the Summary 
of Comments and Explanation of Revisions.

III. Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it 
is hereby certified that the regulations will not have a significant 
economic impact on a substantial number of small entities. These 
regulations affect certain plan administrators and participants, owners 
of individual retirement accounts 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,

[[Page 58906]]

accounts, and annuities. Because of the broad scope of the regulations, 
the rule may affect a substantial number of small entities. However, 
even if a substantial number of small entities are affected, the 
economic impact of these regulations will not be significant. These 
final regulations primarily update the existing regulations to 
implement the statutory changes made since the issuance of the prior 
regulations, while clarifying certain technical issues that have arisen 
in applying those prior regulations. These regulations do not impose 
new compliance burdens and are not expected to result in economically 
meaningful changes in behavior relative to the 2002 or 2004 final 
regulations. The election described in Sec.  1.401(a)(9)-3(b)(4)(iii) 
and (c)(5)(iii) is expected to be an unusual occurrence for small 
entities because few individuals with benefits in retirement plans 
maintained by small entities are likely to make these elections. In the 
case of Sec.  1.401(a)(9)-4(e)(7), when determining whether a 
designated beneficiary is disabled or chronically ill, the reporting 
burden is primarily on the designated beneficiary rather than the plan 
sponsor. In the case of Sec.  1.401(a)(9)-4(h), when determining 
required minimum distributions in cases in which a plan participant 
wishes to designate a trust as beneficiary of the participant's 
benefit, the reporting burden is primarily on the plan participant (or 
the trustee of the trust named as beneficiary) to supply information 
rather than on the entity maintaining the retirement plan. In addition, 
the number of participants per plan to whom the burden applies is 
likely to be small. In Sec.  1.403(b)-3(e)(6)(ii), the recordkeeping 
burden with respect to section 403(b) contracts under which the pre-
1987 account balance must be maintained only applies to issuers and 
custodians of those contracts, which generally are not small entities.
    Pursuant to section 7805(f) of the Code, the proposed regulations 
preceding these regulations were submitted to the Chief Counsel for 
Advocacy of the Small Business Administration (Office of Advocacy) for 
comment on their impact on small business. The Office of Advocacy 
commented on the proposed regulations \20\ and recommended that the IRS 
publish for public comment either a supplemental regulatory flexibility 
act assessment with a valid factual basis in support of a certification 
or an initial regulatory flexibility analysis. The Office of Advocacy 
argued that the certification in the proposed regulations did not 
adequately address the economic impact of the proposed regulations on 
financial planners for the costs to learn those rules, update 
distribution plans, and advise clients. The Treasury Department and the 
IRS disagree because the certification is based on the direct economic 
impact of the proposed regulations on the regulated community rather 
than their advisors. Any economic impact on a financial planner is not 
a direct impact. The regulations do not address the conduct of, or 
requirements related to, financial planners.
---------------------------------------------------------------------------

    \20\ The comment included a recommendation to eliminate the 
requirement for annual distribution in certain circumstances as 
described in section I.E.3.a of the Summary of Comments and 
Explanation of Revisions portion of this preamble. For the reasons 
described in that section, these regulations retain that rule.
---------------------------------------------------------------------------

IV. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that agencies assess anticipated costs and benefits and take certain 
other actions before issuing a final rule that includes any Federal 
mandate that may result in expenditures in any one year by a State, 
local, or Tribal government, in the aggregate, or by the private 
sector, of $100 million in 1995 dollars, updated annually for 
inflation. The regulations do not include any Federal mandate that may 
result in expenditures by State, local, or Tribal governments, or by 
the private sector in excess of that threshold.

V. Executive Order 13132: Federalism

    Executive Order 13132 (Federalism) prohibits an agency from 
publishing any rule that has federalism implications if the rule either 
imposes substantial, direct compliance costs on State and local 
governments, and is not required by statute, or preempts State law, 
unless the agency meets the consultation and funding requirements of 
section 6 of the Executive order. The regulations would not have 
federalism implications, impose substantial direct compliance costs on 
State and local governments, or preempt State law within the meaning of 
the Executive order.

VI. Congressional Review Act

    The Administrator of the Office of Information and Regulatory 
Affairs of the OMB has determined that this Treasury decision is a 
major rule for purposes of the Congressional Review Act (5 U.S.C. 801 
et seq.) (``CRA'').

Statement of Availability of IRS Documents

    IRS Revenue Procedures, Revenue Rulings notices, and other guidance 
cited in this document are published in the Internal Revenue Bulletin 
(or Cumulative Bulletin) and are available from the Superintendent of 
Documents, U.S. Government Publishing Office, Washington, DC 20402, or 
by visiting the IRS website at https://www.irs.gov.

Drafting Information

    The principal authors of these regulations are Brandon M. Ford and 
Linda S.F. Marshall, of the Office of the Associate Chief Counsel 
(Employee Benefits, Exempt Organizations, and Employment Taxes). 
However, other personnel from the Treasury Department and the IRS 
participated in the development of the regulations.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 31

    Employment taxes, Fishing vessels, Gambling, Income taxes, 
Penalties, Pensions, Railroad retirement, Reporting and recordkeeping 
requirements, Social security, Unemployment compensation.

26 CFR Part 54

    Excise taxes, Health care, Pensions, Reporting and recordkeeping 
requirements.

Adoption of Amendments to the Regulations

    Accordingly, the Treasury Department and the IRS amend 26 CFR parts 
1, 31, and 54 as follows:

PART 1--INCOME TAX

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 2. For each section set forth below, revise the section by 
removing the text that appears in the column labeled ``Remove'' and 
replacing it with the text that appears in the column labeled 
``Insert'':

[[Page 58907]]



------------------------------------------------------------------------
     Regulation section              Remove                Insert
------------------------------------------------------------------------
Sec.   1.72(p)-1, Q&A-12....  ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
                               Q&A-4(d)''.           2(c)(3)''.
Sec.   1.72(p)-1, Q&A-        ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 13(a)(2).                     Q&A-9(b)''.           2(g)(3)(i)''.
Sec.   1.72(p)-1, Q&A-13(b).  ``Sec.   1.402(c)-2,  ``Example 6 in Sec.
                               Q&A-9(c), Example      1.402(c)-2(g)(5)(v
                               6''.                  i)''.
Sec.   1.401(a)(31)-1, Q&A-   ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 1(a).                         Q&A-3 through Q&A-    2''.
                               10 and Q&A-14''.
Sec.   1.401(a)(31)-1, Q&A-   ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 1(a).                         Q&A-2''.              2(a)(1)(iii)''.
Sec.   1.401(a)(31)-1, Q&A-   ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 1(a).                         Q&A-3 through Q&A-    2''.
                               10 and Q&A-14''.
Sec.   1.401(a)(31)-1, Q&A-   ``Sec.   1.402-2(c)-  ``Sec.   1.402(c)-
 14(b)(1).                     2, Q&A-1''.           2(a)''.
Sec.   1.401(a)(31)-1, Q&A-   ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 14(b)(1).                     Q&A-9''.              2(g)''.
Sec.   1.401(a)(31)-1, Q&A-   ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 14(b)(2).                     Q&A-1''.              2(a)''.
Sec.   1.401(a)(31)-1, Q&A-   ``Sec.   1.402(c)-    ``Sec.   1.402(c)-
 16.                           2(b), Q&A-9''.        2(g)''.
Sec.   1.401(a)(31)-1, Q&A-   ``Sec.   1.402(c)-    ``Sec.   1.402(c)-
 17.                           2), Q&A-10''.         2(h))''.
Sec.   1.401(a)(31)-1, Q&A-   ``Section 1.402(c)-   ``Section 1.402(c)-
 17.                           2, Q&A-10''.          2(h)''.
Sec.   1.401(a)(31)-1, Q&A-   ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 18(a).                        Q&A-15''.             2(k)(2)''.
Sec.   1.401(k)-2(b)(2)(vi).  ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
                               A-4''.                2(c)(3)''.
Sec.   1.401(k)-              ``Sec.   1.401(a)(9)- ``Sec.  Sec.
 2(b)(2)(vii)(C).              5, A-9(b)''.          1.401(a)(9)-5(g)(2)
                                                     (ii) and 1.402(c)-
                                                     2(c)(3)''.
Sec.   1.401(k)-4(e)(1).....  ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
                               Q&A-1(a)''.           2(a)''.
Sec.   1.401(m)-              ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 2(b)(2)(vi)(A).               A-4''.                2(c)(3)''.
Sec.   1.401(m)-2(b)(3)(iii)  ``Sec.   1.401(a)(9)- ``Sec.  Sec.
                               5, A-9(b)''.          1.401(a)(9)-5(g)(2)
                                                     (ii) and 1.402(c)-
                                                     2(c)(3)''.
Sec.   1.402(a)-1(a)(2).....  ``1.401(a)(9)-6, Q&A- ``1.401(a)(9)-6(d)''
                               4''.                  .
Sec.   1.402A-1, Q&A-11.....  ``A-4 of Sec.         ``Sec.   1.402(c)-
                               1.402(c)-2''.         2(c)(3)''.
Sec.   1.402A-1, Q&A-14.....  ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
                               A-10(a)''.            2(h)''.
Sec.   1.408A-4, Q&A          ``Sec.   1.401(a)(9)- ``Sec.   1.401(a)(9)-
 14(b)(3).                     6, Q&A-12''.          6(m)(2)''.
Sec.   1.408A-4, Q&A          ``Sec.   1.401(a)(9)- ``Sec.   1.401(a)(9)-
 14(b)(3)(iii).                6, Q&A-12(c)(1) and   6(m)(3)''.
                               (c)(2)''.
Sec.   1.408A-6, Q&A-14(d)..  ``A-3 of Sec.         ``Sec.   1.401(a)(9)-
                               1.401(a)(9)-5''.      5(b)(4)''.
Sec.   1.408A-6, Q&A-14(d)..  ``A-12 of Sec.        ``Sec.   1.408-
                               1.408-8''.            8(h)''.
Sec.   1.408A-6, Q&A-14(d)..  ``A-17 of Sec.        ``Sec.   1.401(a)(9)-
                               1.401(a)(9)-6''.      6(q)''.
Sec.   1.409A-                ``Sec.   1.401(a)(9)- ``Sec.   1.401(a)(9)-
 2(b)(2)(ii)(B)(5).            6, Q&A-14(a)(1) or    6(o)(1)(i) or
                               (2)''.                (ii)''.
Sec.   1.411(b)(5)-           ``Sec.   1.401(a)(9)- ``Sec.   1.401(a)(9)-
 1(d)(4)(iii).                 6, A-14(b)''.         6(o)(2)''.
Sec.   1.411(b)(5)-           ``Sec.   1.401(a)(9)- ``Sec.   1.401(a)(9)-
 1(d)(4)(iii).                 6, A-14(b)(2)''.      6(o)(2)(ii)''.
Sec.   1.6047-2(a)(1).......  ``A-17 of Sec.        ``Sec.   1.401(a)(9)-
                               1.401(a)(9)-6''.      6(q)''.
Sec.   1.6047-2(b)(1).......  ``A-17(d)(2)(ii) of   ``Sec.   1.401(a)(9)-
                               Sec.   1.401(a)(9)-   6(q)(4)(ii)(B)''.
                               6''.
------------------------------------------------------------------------


0
Par. 3. Revise and republish Sec. Sec.  1.401(a)(9)-0 through 
1.401(a)(9)-8 to read as follows:


Sec.  1.401(a)(9)-0  Required minimum distributions; table of contents.

    This table of contents lists the regulations relating to required 
minimum distributions under section 401(a)(9) of the Internal Revenue 
Code as follows:

Sec.  1.401(a)(9)-1 Minimum distribution requirement in general.

    (a) Plans subject to minimum distribution requirement.
    (1) In general.
    (2) Participant in multiple plans.
    (3) Governmental plans.
    (b) Statutory effective date.
    (1) In general.
    (2) Effective date for section 401(a)(9)(H).
    (3) Examples.
    (c) Required and optional plan provisions.
    (1) Required provisions.
    (2) Optional provisions.
    (d) Regulatory applicability date.

Sec.  1.401(a)(9)-2 Distributions commencing during an employee's 
lifetime.

    (a) Distributions commencing during an employee's lifetime.
    (1) In general.
    (2) Amount required to be distributed for a calendar year.
    (3) Distributions commencing before required beginning date.
    (4) Distributions after death.
    (b) Determination of required beginning date.
    (1) General rule.
    (2) Definition of applicable age.
    (3) Required beginning date for 5-percent owner.
    (4) Uniform required beginning date.
    (5) Plans maintained by more than one employer.

Sec.  1.401(a)(9)-3 Death before required beginning date.

    (a) Distribution requirements.
    (1) In general.
    (2) Special rule for designated Roth accounts.
    (b) Distribution requirements in the case of a defined benefit 
plan.
    (1) In general.
    (2) 5-year rule.
    (3) Annuity payments.
    (4) Determination of which rule applies.
    (c) Distributions in the case of a defined contribution plan.
    (1) In general.
    (2) 5-year rule.
    (3) 10-year rule.
    (4) Life expectancy payments.
    (5) Determination of which rule applies.
    (d) Permitted delay for surviving spouse beneficiaries.
    (e) Distributions that commence after surviving spouse's death.
    (1) In general.
    (2) Remarriage of surviving spouse.
    (3) When distributions are treated as having begun to surviving 
spouse.

Sec.  1.401(a)(9)-4 Determination of the designated beneficiary.

    (a) Beneficiary designated under the plan.
    (1) In general.
    (2) Entitlement to employee's interest in the plan.
    (3) Specificity of beneficiary designation.
    (4) Affirmative and default elections of designated beneficiary.
    (b) Designated beneficiary must be an individual.
    (c) Rules for determining beneficiaries.
    (1) Time period for determining the beneficiary.
    (2) Circumstances under which a beneficiary is disregarded as a 
beneficiary of the employee.
    (3) Examples.
    (d) Application of beneficiary designation rules to surviving 
spouse.
    (e) Eligible designated beneficiaries.
    (1) In general.
    (2) Multiple designated beneficiaries.
    (3) Determination of age of majority.
    (4) Disabled individual.
    (5) Chronically ill individual.
    (6) Individual not more than 10 years younger than the employee.
    (7) Documentation requirements for disabled or chronically ill 
individuals.
    (8) Applicability of definition of eligible designated 
beneficiary to beneficiary of surviving spouse.

[[Page 58908]]

    (9) Examples.
    (f) Special rules for trusts.
    (1) Look-through of trust to determine designated beneficiaries.
    (2) Trust requirements.
    (3) Trust beneficiaries treated as beneficiaries of the 
employee.
    (4) Multiple trust arrangements.
    (5) Identifiability of trust beneficiaries.
    (6) Examples.
    (g) Applicable multi-beneficiary trust.
    (1) Certain see-through trusts with disabled or chronically ill 
beneficiaries.
    (2) Termination of interest in trust.
    (3) Special definition of designated beneficiary.
    (h) Documentation requirements for trusts.
    (1) General rule.
    (2) Required minimum distributions while employee is still 
alive.
    (3) Required minimum distributions after death.
    (4) Relief for discrepancy between trust instrument and employee 
certifications or earlier trust instruments.

Sec.  1.401(a)(9)-5 Required minimum distributions from defined 
contribution plans.

    (a) General rules.
    (1) In general.
    (2) Distribution calendar year.
    (3) Time for distributions.
    (4) Minimum distribution incidental benefit requirement.
    (5) Annuity contracts.
    (6) Impact of additional distributions in prior years.
    (b) Determination of account balance.
    (1) General rule.
    (2) Adjustment for subsequent allocations and distributions.
    (3) Adjustment for designated Roth accounts.
    (4) Exclusion for QLAC.
    (5) Treatment of rollovers.
    (c) Determination of applicable denominator during employee's 
lifetime.
    (1) General rule.
    (2) Spouse is sole beneficiary.
    (d) Applicable denominator after employee's death.
    (1) Death on or after the employee's required beginning date.
    (2) Death before an employee's required beginning date.
    (3) Remaining life expectancy.
    (e) Distribution of employee's entire interest required.
    (1) In general.
    (2) 10-year limit for designated beneficiary who is not an 
eligible designated beneficiary.
    (3) 10-year limit following death of eligible designated 
beneficiary.
    (4) 10-year limit after minor child of the employee reaches age 
of majority.
    (f) Rules for multiple designated beneficiaries.
    (1) Determination of applicable denominator.
    (2) Determination of when entire interest is required to be 
distributed.
    (g) Special rules.
    (1) Treatment of nonvested amounts.
    (2) Distributions taken into account.
    (3) Surviving spouse election under section 401(a)(9)(B)(iv).

Sec.  1.401(a)(9)-6 Required minimum distributions for defined 
benefit plans and annuity contracts.

    (a) General rules.
    (1) In general.
    (2) Definition of life annuity.
    (3) Annuity commencement.
    (4) Single-sum distributions.
    (5) Death benefits.
    (6) Separate treatment of separate identifiable components.
    (7) Additional guidance.
    (b) Application of incidental benefit requirement.
    (1) Life annuity for employee.
    (2) Joint and survivor annuity.
    (3) Period certain and annuity features.
    (4) Deemed satisfaction of incidental benefit rule.
    (c) Period certain annuity.
    (1) Distributions commencing during the employee's life.
    (2) Distributions commencing after the employee's death.
    (d) Use of annuity contract.
    (1) In general.
    (2) Applicability of section 401(a)(9)(H).
    (e) Treatment of additional accruals.
    (1) General rule.
    (2) Administrative delay.
    (f) Treatment of nonvested benefits.
    (g) Requirement for actuarial increase.
    (1) General rule.
    (2) Nonapplication to 5-percent owners.
    (3) Nonapplication to governmental plans.
    (4) Nonapplication to church plans and church employees.
    (h) Amount of actuarial increase.
    (1) In general.
    (2) Actuarial equivalence basis.
    (3) Coordination with section 411 actuarial increase.
    (i) [Reserved]
    (j) Distributions restricted pursuant to section 436.
    (1) General rule.
    (2) Payments restricted under section 436(d)(3).
    (3) Payments restricted under section 436(d)(1) or (2).
    (k) Treatment of early commencement.
    (1) General rule.
    (2) Joint and survivor annuity, non-spouse beneficiary.
    (3) Limitation on period certain.
    (l) Early commencement for surviving spouse.
    (m) Determination of entire interest under annuity contract.
    (1) General rule.
    (2) Entire interest.
    (3) Exclusions.
    (4) Examples.
    (n) Change in annuity payment period.
    (1) In general.
    (2) Reannuitization.
    (3) Conditions.
    (4) Examples.
    (o) Increase in annuity payments.
    (1) General rules.
    (2) Eligible cost of living index.
    (3) Additional permitted increases for annuity contracts 
purchased from insurance companies.
    (4) Additional permitted increases for annuity payments from a 
qualified trust.
    (5) Actuarial gain defined.
    (6) Examples.
    (p) Payments to children.
    (1) In general.
    (2) Age of majority.
    (q) Qualifying longevity annuity contract.
    (1) Definition of qualifying longevity annuity contract.
    (2) Limitation on premiums.
    (3) Payments after death of the employee.
    (4) Rules of application.

Sec.  1.401(a)(9)-7 Rollovers and transfers.

    (a) Treatment of rollover from distributing plan.
    (b) Treatment of rollover by receiving plan.
    (c) Treatment of transfer under transferor plan.
    (1) Generally not treated as distribution.
    (2) Account balance decreased after transfer.
    (d) Treatment of transfer under transferee plan.
    (e) Treatment of spinoff or merger.

Sec.  1.401(a)(9)-8 Special rules.

    (a) Use of separate accounts.
    (1) Separate application of section 401(a)(9) for each 
beneficiary.
    (2) Separate accounting requirements.
    (b) Application of consent requirements.
    (c) Definition of spouse.
    (d) Treatment of QDROs.
    (1) Continued treatment of spouse.
    (2) Separate accounts.
    (3) Other situations.
    (e) Application of section 401(a)(9) pending determination of 
whether a domestic relations order is a QDRO is being made.
    (f) Application of section 401(a)(9) when insurer is in State 
delinquency proceedings.
    (g) In-service distributions required to satisfy section 
401(a)(9).
    (h) TEFRA section 242(b) elections.
    (1) In general.
    (2) Application of section 242(b) election after transfer.
    (3) Application of section 242(b) election after rollover.
    (4) Revocation of section 242(b) election.

Sec.  1.401(a)(9)-9 Life expectancy and Uniform Lifetime tables.

    (a) In general.
    (b) Single Life Table.
    (c) Uniform Lifetime Table.
    (d) Joint and Last Survivor Table.
    (e) Mortality rates.
    (f) Applicability dates.
    (1) In general.
    (2) Application to life expectancies that may not be 
recalculated.


Sec.  1.401(a)(9)-1  Minimum distribution requirement in general.

    (a) Plans subject to minimum distribution requirement--(1) In 
general. Under section 401(a)(9), all stock bonus, pension, and profit-
sharing plans qualified under section 401(a) and annuity contracts 
described in section 403(a) are subject to required minimum 
distribution rules. See this section and Sec. Sec.  1.401(a)(9)-2 
through 1.401(a)(9)-9 for the distribution rules applicable to these 
plans. Under section 403(b)(10), annuity contracts and custodial

[[Page 58909]]

accounts described in section 403(b) are subject to required minimum 
distribution rules. See Sec.  1.403(b)-6(e) for the distribution rules 
applicable to these annuity contracts and custodial accounts. Under 
section 408(a)(6) and 408(b)(3), individual retirement accounts and 
individual retirements annuities (collectively, IRAs) are subject to 
required minimum distribution rules. See Sec.  1.408-8 for the minimum 
distribution rules applicable to IRAs and Sec.  1.408A-6 for the 
minimum distribution rules applicable to Roth IRAs under section 408A. 
Under section 457(d)(2), eligible deferred compensation plans described 
in section 457(b) for employees of tax-exempt organizations or 
employees of State and local governments are subject to required 
minimum distribution rules. See Sec.  1.457-6(d) for the minimum 
distribution rules applicable to those eligible deferred compensation 
plans.
    (2) Participant in multiple plans. If an employee is a participant 
in more than one plan, the plans in which the employee participates are 
not permitted to be aggregated for purposes of testing whether the 
distribution requirements of section 401(a)(9) are met. Thus, the 
distribution of the benefit of the employee under each plan must 
separately meet the requirements of section 401(a)(9). For this 
purpose, a plan described in section 414(k) is treated as two separate 
plans, a defined contribution plan to the extent benefits are based on 
an individual account and a defined benefit plan with respect to the 
remaining benefits.
    (3) Governmental plans. A governmental plan (within the meaning of 
section 414(d)), or an eligible governmental plan described in Sec.  
1.457-2(f), is treated as having complied with section 401(a)(9) if the 
plan complies with a reasonable, good faith interpretation of section 
401(a)(9). Thus, the terms of a governmental plan that reflect a 
reasonable, good faith interpretation of section 401(a)(9) do not have 
to provide that distributions will be made in accordance with this 
section and Sec. Sec.  1.401(a)(9)-2 through 1.401(a)(9)-9. Similarly, 
a governmental plan may apply the rules of section 401(a)(9)(F) using 
the rules of Sec.  1.401(a)(9)-6, Q&A-15 (as it appeared in the April 
1, 2023, edition of 26 CFR part 1).
    (b) Statutory effective date--(1) In general. The distribution 
rules of section 401(a)(9) generally apply to all account balances and 
benefits in existence on or after January 1, 1985.
    (2) Effective date for section 401(a)(9)(H)--(i) General effective 
date. Except as otherwise provided in this paragraph (b)(2), section 
401(a)(9)(H) applies with respect to employees who die on or after 
January 1, 2020. However, in the case of a governmental plan (as 
defined in section 414(d)), section 401(a)(9)(H) applies with respect 
to employees who die on or after January 1, 2022.
    (ii) Delayed effective date for collectively bargained plans--(A) 
General rule. In the case of a plan maintained pursuant to one or more 
collective bargaining agreements between employee representatives and 
one or more employers ratified before December 20, 2019 (the date of 
enactment of the Further Consolidated Appropriations Act, 2020, Public 
Law 116-94, 133 Stat. 2534 (2019)), section 401(a)(9)(H) generally 
applies with respect to employees who die on or after January 1, 2022.
    (B) Earlier effective date if agreements terminate. Notwithstanding 
paragraph (b)(2)(ii)(A) of this section, section 401(a)(9)(H) applies 
to a plan maintained pursuant to one or more collective bargaining 
agreements with respect to employees who die in 2020 or 2021 if--
    (1) The year in which the employee dies begins after the date on 
which the last of the collective bargaining agreements described in 
paragraph (b)(2)(ii)(A) of this section terminates (determined without 
regard to any extension thereof to which the parties agreed on or after 
December 20, 2019), and
    (2) Section 401(a)(9)(H) would apply with respect to the employee 
under the rules of paragraph (b)(2)(i) of this section.
    (C) Rules of application. For purposes of this paragraph 
(b)(2)(ii)--
    (1) A plan is treated as maintained pursuant to one or more 
collective bargaining agreements only if the plan constitutes a 
collectively bargained plan under the rules of Sec.  1.436-
1(a)(5)(ii)(B), and
    (2) Any plan amendment made pursuant to a collective bargaining 
agreement that amends the plan solely to conform to the requirements of 
section 401(a)(9)(H) is not treated as a termination of the collective 
bargaining agreement.
    (iii) Applicability upon death of designated beneficiary--(A) In 
general. Except as otherwise provided in this paragraph (b)(2)(iii), if 
an employee who died before the effective date described in paragraph 
(b)(2)(i) or (ii) of this section (whichever applies to the plan) has 
only one designated beneficiary and that beneficiary dies on or after 
that effective date, then, upon the death of the designated 
beneficiary, section 401(a)(9)(H) applies with respect to any 
beneficiary of the employee's designated beneficiary. Section 401(b)(5) 
of Division O of the Further Consolidated Appropriations Act, 2020 
(known as the SECURE Act) provides that, if an employee dies before the 
effective date, then a designated beneficiary of an employee is treated 
as an eligible designated beneficiary. Accordingly, once the rules of 
section 401(a)(9)(H) apply with respect to the employee's designated 
beneficiary, the rules of section 401(a)(9)(H)(iii) (requiring full 
distribution of the employee's interest within 10 years after the death 
of an eligible designated beneficiary) apply upon the designated 
beneficiary's death.
    (B) Employee with multiple designated beneficiaries. If an employee 
described in paragraph (b)(2)(iii)(A) of this section has more than one 
designated beneficiary, then whether section 401(a)(9)(H) applies is 
determined based on the date of death of the oldest of the employee's 
designated beneficiaries. Thus, section 401(a)(9)(H) will apply upon 
the death of the oldest of the employee's designated beneficiaries if 
that designated beneficiary is still alive on or after the effective 
date of section 401(a)(9)(H) for the plan as determined under the rules 
of paragraph (b)(2)(i) or (ii) of this section. However, see Sec.  
1.401(a)(9)-8(a) for rules related to the separate application of 
section 401(a)(9) with respect to multiple beneficiaries if certain 
requirements are met.
    (C) Surviving spouse of the employee dies before employee's 
required beginning date. If an employee described in paragraph 
(b)(2)(iii)(A) of this section dies before the employee's required 
beginning date and the employee's surviving spouse is waiting to begin 
distributions until the year for which the employee would have been 
required to begin distributions pursuant to section 
401(a)(9)(B)(iv)(II), then, in applying the rules of this paragraph 
(b)(2)(iii), the surviving spouse is treated as the employee. Thus, for 
example, if an employee with a required beginning date of April 1, 
2025, names the employee's surviving spouse as the sole beneficiary of 
the employee's interest in the plan, both the employee and the 
employee's surviving spouse die before the effective date of section 
401(a)(9)(H) for the plan, and that spouse's designated beneficiary 
dies on or after that effective date, then section 401(a)(9)(H) applies 
with respect to the surviving spouse's designated beneficiary upon the 
death of that designated beneficiary (so that full distribution of the 
employee's interest must be made no later than the end of

[[Page 58910]]

the calendar year that includes the tenth anniversary of the date of 
that designated beneficiary's death).
    (iv) Qualified annuity exception--(A) In general. Section 
401(a)(9)(H) does not apply to a commercial annuity (as defined in 
section 3405(e)(6))--
    (1) That is a binding annuity contract in effect as of December 20, 
2019;
    (2) Under which payments satisfy the requirements of Sec. Sec.  
1.401(a)(9)-1 through 1.401(a)(9)-9 (as those sections appeared in the 
April 1, 2019, edition of 26 CFR part 1); and
    (3) That satisfies the irrevocability requirements of paragraph 
(b)(2)(iv)(B) of this section.
    (B) Irrevocability requirements applicable to annuity contract. A 
contract satisfies the requirements of this paragraph (b)(2)(iv)(B) if 
the employee (or, if the employee has died, the designated beneficiary) 
has made an irrevocable election before December 20, 2019, as to the 
method and amount of annuity payments to the employee and any 
designated beneficiary.
    (3) Examples. The following examples illustrate the applicability 
date rules of this paragraph (b).
    (i) Example 1. Employer M maintains a defined contribution plan, 
Plan X. Employee A died in 2017, at the age of 68, and designated A's 
40-year-old child, B, who was not disabled or chronically ill at the 
time of A's death, as the sole beneficiary of A's interest in Plan X. 
Pursuant to a plan provision in Plan X, B elected to take distributions 
over B's life expectancy under section 401(a)(9)(B)(iii). B dies in 
2024, after the effective date of section 401(a)(9)(H). Because section 
401(b)(5) of the SECURE Act treats B as an eligible designated 
beneficiary, the rules of section 401(a)(9)(H)(iii) apply to B's 
beneficiaries. Therefore, A's remaining interest in Plan X must be 
distributed by the end of 2034 (the calendar year that includes the 
tenth anniversary of B's death).
    (ii) Example 2. The facts are the same as in paragraph (b)(3)(i) of 
this section (Example 1), except that B died in 2019. Because A's 
designated beneficiary died before the effective date of section 401 of 
the SECURE Act, the rules of section 401(a)(9)(H) do not apply to B's 
beneficiaries.
    (iii) Example 3. The facts are the same as in paragraph (b)(3)(i) 
of this section (Example 1) except that, pursuant to a provision in 
Plan X, B elected the 5-year rule under section 401(a)(9)(B)(ii). 
Accordingly, A's entire interest is required to be distributed by the 
end of 2022. Because A died before January 1, 2020, section 
401(a)(9)(H) does not apply with respect to B. Therefore, section 
401(a)(9)(H)(i)(I) does not extend the 5-year period under B's election 
to a 10-year period. Although B's election required A's entire interest 
to be distributed by the end of 2022, the enactment of section 
401(a)(9)(I)(iii)(II) (permitting disregard of 2020 when the 5-year 
period applies) permits distribution of A's entire interest in the plan 
to be delayed until the end of 2023.
    (iv) Example 4. The facts are the same as in paragraph (b)(3)(i) of 
this section (Example 1), except that A designates a see-through trust 
that satisfies the requirements of Sec.  1.401(a)(9)-4(f)(2) as the 
sole beneficiary of A's interest in Plan X. All of the trust 
beneficiaries are alive as of January 1, 2020. The oldest of the trust 
beneficiaries, C, died in 2022. Because section 401(b)(5) of the SECURE 
Act treats C as an eligible designated beneficiary, the rules of 
section 401(a)(9)(H)(iii) apply to the other trust beneficiaries. Thus, 
unless the rules of Sec.  1.401(a)(9)-5(f)(2)(ii)(B) or (iii) apply, 
A's remaining interest in Plan X must be distributed by the end of 2032 
(the calendar year that includes the tenth anniversary of C's death).
    (v) Example 5. The facts are the same as in paragraph (b)(3)(iv) of 
this section (Example 4), except that C died in 2019. Because the 
oldest designated beneficiary died before January 1, 2020, the rules of 
section 401(a)(9)(H) do not apply to any of the other trust 
beneficiaries.
    (vi) Example 6. The facts are the same as in paragraph (b)(3)(i) of 
this section (Example 1), except that B elected to purchase an annuity 
that pays over B's lifetime with a 15-year certain period starting in 
the calendar year following the calendar year of A's death. Because B 
died after the effective date of section 401(a)(9)(H), the rules of 
section 401(a)(9)(H)(iii) apply, and accordingly, the annuity may not 
provide distributions any later than the end of 2034.
    (c) Required and optional plan provisions--(1) Required provisions. 
In order to satisfy section 401(a)(9), a plan must include the 
provisions described in this paragraph (c)(1) reflecting section 
401(a)(9). First, a plan generally must set forth the statutory rules 
of section 401(a)(9), including the incidental death benefit 
requirement in section 401(a)(9)(G). Second, a plan must provide that 
distributions will be made in accordance with this section and 
Sec. Sec.  1.401(a)(9)-2 through 1.401(a)(9)-9. A plan document also 
must provide that the provisions reflecting section 401(a)(9) override 
any distribution options in the plan that are inconsistent with section 
401(a)(9). A plan also must include any other provisions reflecting 
section 401(a)(9) that are prescribed by the Commissioner in revenue 
rulings, notices, and other guidance published in the Internal Revenue 
Bulletin. See Sec.  601.601(d) of this chapter.
    (2) Optional provisions. A plan may also include optional 
provisions governing plan distributions that do not conflict with 
section 401(a)(9). For example, a defined benefit plan may include a 
provision described in Sec.  1.401(a)(9)-3(b)(4)(ii) (requiring that 
the 5-year rule apply to an employee who has a designated beneficiary). 
Similarly, a defined contribution plan may provide for an election by 
an eligible designated beneficiary as described in Sec.  1.401(a)(9)-
3(c)(5)(iii).
    (d) Regulatory applicability date. This section and Sec. Sec.  
1.401(a)(9)-2 through 1.401(a)(9)-9 apply for purposes of determining 
required minimum distributions for calendar years beginning on or after 
January 1, 2025. For earlier calendar years, the rules of Sec. Sec.  
1.401(a)(9)-1 through 1.401(a)(9)-9 (as those sections appeared in the 
April 1, 2023, edition of 26 CFR part 1) apply.


Sec.  1.401(a)(9)-2  Distributions commencing during an employee's 
lifetime.

    (a) Distributions commencing during an employee's lifetime--(1) In 
general. In order to satisfy section 401(a)(9)(A), the entire interest 
of each employee must be distributed to the employee not later than the 
required beginning date, or must be distributed, beginning not later 
than the required beginning date, over the life of the employee or the 
joint lives of the employee and a designated beneficiary or over a 
period not extending beyond the life expectancy of the employee or the 
joint life and last survivor expectancy of the employee and the 
designated beneficiary. Under section 401(a)(9)(G), lifetime 
distributions must satisfy the incidental death benefit requirements of 
Sec.  1.401-1(b)(1).
    (2) Amount required to be distributed for a calendar year. The 
amount required to be distributed for each calendar year in order to 
satisfy section 401(a)(9)(A) and (G) generally depends on whether the 
amount to be distributed is from an individual account under a defined 
contribution plan, is an annuity payment from a defined benefit plan, 
or is a payment under an annuity contract. For the method of 
determining the required minimum distribution in accordance with 
section 401(a)(9)(A) and (G) from an individual account under a defined 
contribution plan, see Sec.  1.401(a)(9)-5. For the method of 
determining the required minimum distribution in accordance with 
section 401(a)(9)(A) and (G) in the case of

[[Page 58911]]

annuity payments from a defined benefit plan or under an annuity 
contract (including an annuity contract purchased under a defined 
contribution plan), see Sec.  1.401(a)(9)-6.
    (3) Distributions commencing before required beginning date--(i) In 
general. Lifetime distributions made before the employee's required 
beginning date for calendar years before the employee's first 
distribution calendar year, as defined in Sec.  1.401(a)(9)-
5(a)(2)(ii), need not be made in accordance with section 401(a)(9). 
However, if distributions commence before the employee's required 
beginning date under a particular distribution option (such as in the 
form of an annuity) and, under the terms of that distribution option, 
distributions to be made for the employee's first distribution calendar 
year (or any subsequent calendar year) will fail to satisfy section 
401(a)(9), then the distribution option fails to satisfy section 
401(a)(9) at the time distributions commence.
    (ii) Date distributions are treated as having begun. Except as 
otherwise provided in paragraph (a)(3)(iii) of this section and Sec.  
1.401(a)(9)-6(k), distributions to the employee are not treated as 
having begun in accordance with section 401(a)(9)(A)(ii) until the 
employee's required beginning date, as determined in accordance with 
paragraph (b)(1) or (3) of this section, whichever applies to the 
employee. The preceding sentence applies even if the employee has 
received distributions before the employee's required beginning date 
(either pursuant to plan terms that require distributions to begin by 
an earlier date or pursuant to the employee's election). Thus, even if 
payments have been made before the employee's required beginning date, 
the rules of Sec.  1.401(a)(9)-3 will apply if the employee dies before 
that date. For example, if A is an employee who retires in 2023, the 
calendar year A attains age 71, and begins receiving installment 
distributions from a profit-sharing plan over a period not exceeding 
the joint life and last survivor expectancy of A and A's spouse, 
benefits are not treated as having begun in accordance with section 
401(a)(9)(A)(ii) until April 1, 2026 (the April 1 following the 
calendar year in which A attains age 73). Consequently, if A dies 
before April 1, 2026 (A's required beginning date), distributions after 
A's death must be made in accordance with Sec.  1.401(a)(9)-3 
(addressing payments to beneficiaries pursuant to section 
401(a)(9)(B)(ii), (iii), or (iv), whichever applies, in cases in which 
required distributions have not begun) rather than section 
401(a)(9)(B)(i) (addressing payments to beneficiaries in cases in which 
required distributions have begun). This is the case without regard to 
whether, before A's death, the plan distributed the minimum 
distribution for the A's first distribution calendar year (as defined 
in Sec.  1.401(a)(9)-5(a)(2)(ii)).
    (iii) Exception for uniform required beginning date. If a plan 
provides, in accordance with paragraph (b)(4) of this section, that the 
required beginning date for purposes of section 401(a)(9) for all 
employees is April 1 of the calendar year following the calendar year 
described in paragraph (b)(1)(i) of this section, without regard to 
whether the employee is a 5-percent owner, then an employee who dies on 
or after the required beginning date determined under the plan terms is 
treated as dying after distributions have begun in accordance with 
section 401(a)(9)(A)(ii) (even if the employee dies before the April 1 
following the calendar year in which the employee retires).
    (4) Distributions after death. Section 401(a)(9)(B)(i) provides 
that, if the distribution of an employee's interest has begun in 
accordance with section 401(a)(9)(A)(ii), and the employee dies before 
the employee's entire interest has been distributed to the employee, 
the remaining portion of the employee's interest must be distributed at 
least as rapidly as under the distribution method being used under 
section 401(a)(9)(A)(ii) as of the date of the employee's death. For 
the method of determining the required minimum distribution in 
accordance with section 401(a)(9)(B)(i) from an individual account 
under a defined contribution plan, see Sec.  1.401(a)(9)-5. In the case 
of annuity payments from a defined benefit plan or under an annuity 
contract (including an annuity contract purchased under a defined 
contribution plan), see Sec.  1.401(a)(9)-6.
    (b) Determination of required beginning date--(1) General rule. 
Except as otherwise provided in this paragraph (b), the employee's 
required beginning date (within the meaning of section 401(a)(9)(C)) is 
April 1 of the calendar year following the later of--
    (i) The calendar year in which the employee attains the applicable 
age; and
    (ii) The calendar year in which the employee retires from 
employment with the employer maintaining the plan.
    (2) Definition of applicable age--(i) In general. The applicable 
age is determined using the employee's date of birth as set forth in 
this paragraph (b)(2).
    (ii) Employees born before July 1, 1949. In the case of an employee 
born before July 1, 1949, the applicable age is age 70\1/2\.
    (iii) Other employees born before 1951. In the case of an employee 
born on or after July 1, 1949, but before January 1, 1951, the 
applicable age is age 72;
    (iv) Employees born in 1951 through 1958. In the case of an 
employee born on or after January 1, 1951, but before January 1, 1959, 
the applicable age is age 73;
    (v) [Reserved]
    (vi) Employees born after 1959. In the case of an employee born on 
or after January 1, 1960, the applicable age is age 75.
    (3) Required beginning date for 5-percent owner--(i) In general. In 
the case of an employee who is a 5-percent owner, the employee's 
required beginning date is April 1 of the calendar year following the 
calendar year in which the employee attains the applicable age.
    (ii) Definition of 5-percent owner. For purposes of section 
401(a)(9), a 5-percent owner is an employee who is a 5-percent owner 
(as defined in section 416) with respect to the plan year ending in the 
calendar year in which the employee attains the applicable age.
    (iii) No applicability to governmental plan or church plan. This 
paragraph (b)(3) does not apply in the case of a governmental plan 
(within the meaning of section 414(d)) or a church plan (within the 
meaning of Sec.  1.401(a)(9)-6(g)(4)(i)).
    (4) Uniform required beginning date. A plan is permitted to provide 
that the required beginning date for purposes of section 401(a)(9) for 
all employees is April 1 of the calendar year following the calendar 
year described in paragraph (b)(1)(i) of this section, without regard 
to whether the employee is a 5-percent owner.
    (5) Plans maintained by more than one employer. In the case of a 
plan maintained by more than one employer, an employee who retires from 
employment with any of those employers but continues to be employed by 
another employer that maintains the plan is not treated as having 
retired for purposes of paragraph (b)(1)(ii) of this section.


Sec.  1.401(a)(9)-3  Death before required beginning date.

    (a) Distribution requirements--(1) In general. Except as otherwise 
provided in Sec. Sec.  1.401(a)(9)-2(a)(3) and 1.401(a)(9)-6(k), if an 
employee dies before the employee's required beginning date (and thus 
before distributions are treated as having begun in accordance with 
section 401(a)(9)(A)(ii)), then--
    (i) In the case of a defined benefit plan, distributions are 
required to be

[[Page 58912]]

made in accordance with paragraph (b) of this section, and
    (ii) In the case of a defined contribution plan, distributions are 
required to be made in accordance with paragraph (c) of this section.
    (2) Special rule for designated Roth accounts. If an employee's 
entire interest under a defined contribution plan is in a designated 
Roth account (as described in section 402A(b)(2)), then no 
distributions are required to be made to the employee during the 
employee's lifetime. Upon the employee's death, that employee is 
treated as having died before his or her required beginning date (so 
that distributions must be made in accordance with the requirements of 
paragraph (c) of this section).
    (b) Distribution requirements in the case of a defined benefit 
plan--(1) In general. Distributions from a defined benefit plan are 
made in accordance with this paragraph (b) if the distributions satisfy 
either paragraph (b)(2) or (3) of this section, whichever applies with 
respect to the employee. The determination of whether paragraph (b)(2) 
or (3) of this section applies is made in accordance with paragraph 
(b)(4) of this section.
    (2) 5-year rule. Except as otherwise provided in Sec.  1.401(a)(9)-
6(j) (relating to defined benefit plans subject to limitations under 
section 436), distributions satisfy this paragraph (b)(2) if the 
employee's entire interest is distributed by the end of the calendar 
year that includes the fifth anniversary of the date of the employee's 
death. For example, if an employee dies on any day in 2022, then in 
order to satisfy the 5-year rule in section 401(a)(9)(B)(ii), the 
entire interest generally must be distributed by the end of 2027.
    (3) Annuity payments. Distributions satisfy this paragraph (b)(3) 
if annuity payments that satisfy the requirements of Sec.  1.401(a)(9)-
6 commence no later than the end of the calendar year following the 
calendar year in which the employee died, except as provided in 
paragraph (d) of this section (permitting a surviving spouse to delay 
the commencement of distributions).
    (4) Determination of which rule applies--(i) No plan provision. If 
a defined benefit plan does not provide for an optional provision 
described in paragraph (b)(4)(ii) or (b)(4)(iii) of this section 
specifying the method of distribution after the death of an employee, 
then distributions must be made as follows--
    (A) If the employee has no designated beneficiary, as determined 
under Sec.  1.401(a)(9)-4, distributions must satisfy paragraph (b)(2) 
of this section; and
    (B) If the employee has a designated beneficiary, distributions 
must satisfy paragraph (b)(3) of this section.
    (ii) Optional plan provisions. A defined benefit plan will not fail 
to satisfy section 401(a)(9) merely because it includes a provision 
specifying that the 5-year rule in paragraph (b)(2) of this section 
(rather than the annuity payment rule in paragraph (b)(3) of this 
section) will apply with respect to some or all of the employees who 
have a designated beneficiary.
    (iii) Elections. A defined benefit plan will not fail to satisfy 
section 401(a)(9) merely because it includes a provision that applies 
with respect to some or all of the employees who have a designated 
beneficiary under which the employee (or designated beneficiary) is 
permitted to elect whether the 5-year rule in paragraph (b)(2) of this 
section or the annuity payment rule in paragraph (b)(3) of this section 
applies. If a plan provides for this type of an election, then--
    (A) The plan must specify the method of distribution that applies 
if neither the employee nor the designated beneficiary makes the 
election unless that method is the method specified in paragraph 
(b)(4)(i) of this section;
    (B) The election must be made no later than the end of the earlier 
of the calendar year by which distributions must be made in order to 
satisfy paragraph (b)(2) of this section and the calendar year in which 
distributions would be required to begin in order to satisfy the 
requirements of paragraph (b)(3) of this section or, if applicable, 
paragraph (d) of this section; and
    (C) As of the last date the election may be made, the election must 
be irrevocable with respect to the beneficiary (and all subsequent 
beneficiaries) and must apply to all subsequent calendar years.
    (c) Distributions in the case of a defined contribution plan--(1) 
In general. The requirements of this paragraph (c) are satisfied if 
distributions are made in accordance with paragraph (c)(2), (3), or (4) 
of this section, whichever applies with respect to the employee. The 
determination of whether paragraph (c)(2), (3), or (4) of this section 
applies is made in accordance with paragraph (c)(5) of this section.
    (2) 5-year rule. Distributions satisfy this paragraph (c)(2) if the 
employee's entire interest is distributed by the end of the calendar 
year that includes the fifth anniversary of the date of the employee's 
death. For example, if an employee dies on any day in 2022, the entire 
interest must be distributed by the end of 2027 in order to satisfy the 
5-year rule in section 401(a)(9)(B)(ii). For purposes of this paragraph 
(c)(2), if an employee died before January 1, 2020, then the 2020 
calendar year is disregarded when determining the calendar year that 
includes the fifth anniversary of the date of the employee's death.
    (3) 10-year rule. Distributions satisfy this paragraph (c)(3) if 
the employee's entire interest is distributed by the end of the 
calendar year that includes the tenth anniversary of the date of the 
employee's death. For example, if an employee died on any day in 2021, 
the entire interest must be distributed by the end of 2031 in order to 
satisfy the 5-year rule in section 401(a)(9)(B)(ii), as extended to 10 
years by section 401(a)(9)(H)(i).
    (4) Life expectancy payments. Distributions satisfy this paragraph 
(c)(4) if annual distributions that satisfy the requirements of Sec.  
1.401(a)(9)-5 commence by the end of the calendar year following the 
calendar year in which the employee died, except as provided in 
paragraph (d) of this section (permitting a surviving spouse to delay 
the commencement of distributions). The requirement to take an annual 
distribution in accordance with the preceding sentence continues to 
apply for all subsequent calendar years until the employee's interest 
is fully distributed. Thus, a required minimum distribution is due for 
the calendar year of the eligible designated beneficiary's death, and 
that amount must be distributed during that calendar year to any 
beneficiary of the deceased eligible designated beneficiary to the 
extent it has not already been distributed to the eligible designated 
beneficiary.
    (5) Determination of which rule applies--(i) No plan provision. If 
a defined contribution plan does not include an optional provision 
described in paragraph (c)(5)(ii) or (c)(5)(iii) of this section 
specifying the method of distribution after the death of an employee, 
distributions must be made as follows--
    (A) If the employee does not have a designated beneficiary, as 
determined under Sec.  1.401(a)(9)-4, distributions must satisfy the 5-
year rule described in paragraph (c)(2) of this section;
    (B) If the employee dies on or after the effective date of section 
401(a)(9)(H) (as determined in Sec.  1.401(a)(9)-1(b)(2)(i) or (ii), 
whichever applies to the plan) and has a designated beneficiary who is 
not an eligible designated beneficiary (as determined under Sec.  
1.401(a)(9)-4(e)), distributions must satisfy the 10-year rule 
described in paragraph (c)(3) of this section; and

[[Page 58913]]

    (C) If the employee has an eligible designated beneficiary, 
distributions must satisfy the life expectancy rule described in 
paragraph (c)(4) of this section.
    (ii) Optional plan provisions. A defined contribution plan will not 
fail to satisfy section 401(a)(9) merely because it includes a 
provision specifying that the 10-year rule described in paragraph 
(c)(3) of this section (rather than the life expectancy rule described 
in paragraph (c)(4) of this section) will apply with respect to some or 
all of the employees who have an eligible designated beneficiary or 
will apply to some categories of eligible designated beneficiaries.
    (iii) Elections. A defined contribution plan will not fail to 
satisfy section 401(a)(9) merely because it includes a provision that 
applies with respect to some or all of the employees who have an 
eligible designated beneficiary or to some categories of eligible 
designated beneficiaries, under which the employee (or eligible 
designated beneficiary) is permitted to elect whether the 10-year rule 
in paragraph (c)(3) of this section or the life expectancy rule in 
paragraph (c)(4) of this section applies. If a plan provides for this 
type of election, then--
    (A) The plan must specify the method of distribution that applies 
if neither the employee nor the designated beneficiary makes the 
election unless that method is the method specified in paragraph 
(c)(5)(i) of this section;
    (B) The election must be made no later than the end of the earlier 
of the calendar year by which distributions must be made in order to 
satisfy paragraph (c)(3) of this section and the calendar year in which 
distributions would be required to begin in order to satisfy the 
requirements of paragraph (c)(4) of this section (or, if applicable, 
paragraph (d) of this section); and
    (C) As of the last date the election may be made, the election must 
be irrevocable with respect to the beneficiary (and all subsequent 
beneficiaries) and must apply to all subsequent calendar years.
    (d) Permitted delay for surviving spouse beneficiaries. If the 
employee's surviving spouse is the employee's sole beneficiary, then 
the commencement of distributions under paragraph (b)(3) or (c)(4) of 
this section may be delayed until the end of the calendar year in which 
the employee would have attained the applicable age.
    (e) Distributions that commence after surviving spouse's death--(1) 
In general. If the employee's surviving spouse is the employee's sole 
beneficiary and dies before distributions have commenced under 
paragraph (d) of this section, then the 5-year rule in paragraph (b)(2) 
or (c)(2) of this section, the 10-year rule in paragraph (c)(3) of this 
section, the annuity payment rules in paragraph (b)(3) of this section, 
or the life expectancy rules in paragraph (c)(4) of this section, are 
to be applied as if the surviving spouse were the employee. For this 
purpose, the date of death of the surviving spouse is substituted for 
the date of death of the employee.
    (2) Remarriage of surviving spouse. If the delayed commencement in 
paragraph (d) of this section applies to the surviving spouse of the 
employee, and the surviving spouse remarries but dies before 
distributions have begun, then the rules in paragraph (d) of this 
section are not available to the surviving spouse of the deceased 
employee's surviving spouse.
    (3) When distributions are treated as having begun to surviving 
spouse. For purposes of section 401(a)(9)(B)(iv)(III), distributions 
are considered to have begun to the surviving spouse of an employee on 
the date, determined in accordance with paragraph (d) of this section, 
on which distributions are required to commence to the surviving spouse 
without regard to whether payments have actually been made before that 
date. However, see Sec.  1.401(a)(9)-6(l) for an exception to this rule 
in the case of an annuity that commences early.


Sec.  1.401(a)(9)-4  Determination of the designated beneficiary.

    (a) Beneficiary designated under the plan--(1) In general. This 
section provides rules for purposes of determining the designated 
beneficiary under section 401(a)(9). For this purpose, a designated 
beneficiary is an individual who is a beneficiary designated under the 
plan.
    (2) Entitlement to employee's interest in the plan. A beneficiary 
designated under the plan is a person who is entitled to a portion of 
an employee's benefit, contingent on the employee's death or another 
specified event. The determination of whether a beneficiary designated 
under the plan is taken into account for purposes of section 401(a)(9) 
is made in accordance with paragraph (c) of this section or, if 
applicable, paragraph (d) of this section.
    (3) Specificity of beneficiary designation. A beneficiary need not 
be specified by name in the plan or by the employee to the plan in 
order for the beneficiary to be designated under the plan, provided 
that the person who is to be the beneficiary is identifiable pursuant 
to the designation. For example, a designation of the employee's 
children as beneficiaries of equal shares of the employee's interest in 
the plan is treated as a designation of beneficiaries under the plan 
even if the children are not specified by name. The fact that an 
employee's interest under the plan passes to a certain person under a 
will or otherwise under applicable State law does not make that person 
a beneficiary designated under the plan absent a designation under the 
plan.
    (4) Affirmative and default elections of designated beneficiary. A 
beneficiary designated under the plan may be designated by a default 
election under the terms of the plan or, if the plan so provides, by an 
affirmative election of the employee (or the employee's surviving 
spouse). The choice of beneficiary is subject to the requirements of 
sections 401(a)(11), 414(p), and 417. See Sec. Sec.  1.401(a)(9)-8(d) 
and (e) for rules that apply to qualified domestic relations orders.
    (b) Designated beneficiary must be an individual. A person that is 
not an individual, such as the employee's estate, is not a designated 
beneficiary. If a person other than an individual is a beneficiary 
designated under the plan, the employee will be treated as having no 
designated beneficiary, even if individuals are also designated as 
beneficiaries. However, see paragraphs (f)(1) and (3) of this section 
for a rule under which certain beneficiaries of a see-through trust 
that is designated as the employee's beneficiary under the plan are 
treated as the employee's beneficiaries under the plan rather than the 
trust and Sec.  1.401(a)(9)-8(a) for rules under which section 
401(a)(9) is applied separately with respect to the separate interests 
of each of the employee's beneficiaries under the plan.
    (c) Rules for determining beneficiaries--(1) Time period for 
determining the beneficiary. Except as provided in paragraphs (d) and 
(f) of this section and Sec.  1.401(a)(9)-6(b)(2)(i), a person is a 
beneficiary taken into account for purposes of section 401(a)(9) if, as 
of the date of the employee's death, that person is a beneficiary 
designated under the plan and none of the events described in paragraph 
(c)(2) of this section has occurred with respect to that person by 
September 30 of the calendar year following the calendar year of the 
employee's death.
    (2) Circumstances under which a beneficiary is disregarded as a 
beneficiary of the employee. With respect to a beneficiary who was 
designated as a beneficiary under the plan as of the date of the 
employee's death (including a beneficiary who is treated as having been 
designated as a

[[Page 58914]]

beneficiary pursuant to paragraph (f) of this section), if any of the 
following events occurs by September 30 of the calendar year following 
the calendar year of the employee's death, then that beneficiary is not 
treated as a beneficiary--
    (i) The beneficiary predeceases the employee;
    (ii) The beneficiary is treated as having predeceased the employee 
pursuant to a simultaneous death provision under applicable State law 
or pursuant to a qualified disclaimer satisfying section 2518 that 
applies to the entire interest to which the beneficiary is entitled; or
    (iii) The beneficiary receives the entire benefit to which the 
beneficiary is entitled.
    (3) Examples. The following examples illustrate the rules of this 
paragraph (c).
    (i) Example 1. Employer M maintains a defined contribution plan, 
Plan X. Employee A dies in 2024 having designated A's three children--
B, C, and D--as beneficiaries, each with a one-third share of A's 
interest in Plan X. B executes a disclaimer of B's entire share of A's 
interest in Plan X within 9 months of A's death and the disclaimer 
satisfies the other requirements of a qualified disclaimer under 
section 2518. Pursuant to the qualified disclaimer, B is disregarded as 
a beneficiary.
    (ii) Example 2. The facts are the same as in paragraph (c)(3)(i) of 
this section (Example 1), except that B does not execute the disclaimer 
until 10 months after A's death. Even if the disclaimer is executed by 
September 30 of the calendar year following the calendar year of A's 
death, the disclaimer is not a qualified disclaimer (because B does not 
meet the 9-month requirement of section 2518) and B remains a 
designated beneficiary of A.
    (iii) Example 3. The facts are the same as in paragraph (c)(3)(i) 
of this section (Example 1) except that, in exchange for B's disclaimer 
of the one-third share of A's interest in Plan X, C transfers C's 
interest in real property to B. Because B has received consideration 
for B's disclaimer of the one-third share, it is not a qualified 
disclaimer under section 2518 and B remains a designated beneficiary.
    (iv) Example 4. The facts are the same as in paragraph (c)(3)(i) of 
this section (Example 1), except that Charity E (an organization exempt 
from taxation under section 501(c)(3)) also is a beneficiary designated 
under the plan as of the date of A's death, with B, C, D, and Charity E 
each having a one-fourth share of A's interest in Plan X. Plan X 
distributes Charity E's one-fourth share of A's interest in the plan by 
September 30 of the calendar year following the calendar year of A's 
death. Accordingly, Charity E is disregarded as A's beneficiary, and B, 
C, and D are treated as A's designated beneficiaries.
    (v) Example 5. The facts are the same as in paragraph (c)(3)(i) of 
this section (Example 1), except that A's spouse, F, also is a 
beneficiary designated under the plan. A and F were residents of State 
Z so that State Z law applies. The laws of State Z include a 
simultaneous death provision under which two individuals who die within 
a 120-hour period of one another are treated as predeceasing each 
other. F dies four hours after A and under the laws of State Z, F is 
treated as predeceasing A. Because, under applicable State law, F is 
treated as predeceasing A, F is disregarded as a beneficiary of A.
    (vi) Example 6. The facts are the same as in paragraph (c)(3)(i) of 
this section (Example 1), except that B, who was alive as of the date 
of A's death, dies before September 30 of the calendar year following 
the calendar year of A's death. Prior to B's death, none of the events 
described in paragraph (c)(2) of this section occurred with respect to 
B. Accordingly, B is still a beneficiary taken into account for 
purposes of section 401(a)(9) regardless of the identity of B's 
successor beneficiaries.
    (d) Application of beneficiary designation rules to surviving 
spouse. This paragraph (d) applies in the case of distributions to 
which Sec.  1.401(a)(9)-3(e) applies (because the employee's spouse is 
the employee's sole beneficiary as of September 30 of the calendar year 
following the calendar year of the employee's death, and the surviving 
spouse dies before distributions to the spouse have begun). If this 
paragraph (d) applies, then the determination of whether a person is a 
beneficiary of the surviving spouse is made using the rules of 
paragraph (c) of this section, except that the date of the surviving 
spouse's death is substituted for the date of the employee's death. 
Thus, a person is a beneficiary if, as of the date of the surviving 
spouse's death, that person is a beneficiary designated under the plan 
and remains a beneficiary as of September 30 of the calendar year 
following the calendar year of the surviving spouse's death.
    (e) Eligible designated beneficiaries--(1) In general. A designated 
beneficiary of the employee is an eligible designated beneficiary if, 
at the time of the employee's death, the designated beneficiary is--
    (i) The surviving spouse of the employee;
    (ii) A child of the employee (within the meaning of section 
152(f)(1)) who has not reached the age of majority within the meaning 
of paragraph (e)(3) of this section;
    (iii) Disabled within the meaning of paragraph (e)(4) of this 
section;
    (iv) Chronically ill within the meaning of paragraph (e)(5) of this 
section;
    (v) Not more than 10 years younger than the employee as determined 
under paragraph (e)(6) of this section; or
    (vi) A designated beneficiary of an employee if the employee died 
before the effective date of section 401(a)(9)(H) described in Sec.  
1.401(a)(9)-1(b)(2)(i) and (ii), whichever applies to the plan.
    (2) Multiple designated beneficiaries--(i) In general. Except as 
provided in paragraphs (e)(2)(ii) and (iii) of this section and Sec.  
1.401(a)(9)-8(a) (relating to separate account treatment), if the 
employee has more than one designated beneficiary, and at least one of 
those beneficiaries is not an eligible designated beneficiary, then the 
employee is treated as not having an eligible designated beneficiary.
    (ii) Special rule for children. If any of the employee's designated 
beneficiaries is an eligible designated beneficiary because the 
beneficiary is the child of the employee who had not reached the age of 
majority at the time of the employee's death, then the employee is 
treated as having an eligible designated beneficiary even if the 
employee has other designated beneficiaries who are not eligible 
designated beneficiaries.
    (iii) Special rule for applicable multi-beneficiary trust. If a 
trust that is designated as the beneficiary of an employee under a plan 
is an applicable multi-beneficiary trust described in paragraph (g) of 
this section, then the trust beneficiaries described in paragraph 
(g)(1)(ii) of this section are treated as eligible designated 
beneficiaries even if one or more of the other trust beneficiaries are 
not eligible designated beneficiaries.
    (3) Determination of age of majority. An individual reaches the age 
of majority on the individual's 21st birthday.
    (4) Disabled individual--(i) In general. Subject to the 
documentation requirements of paragraph (e)(7) of this section, an 
individual is disabled if, as of the date of the employee's death--
    (A) The individual is described in paragraph (e)(4)(ii) or (iii) of 
this section; or
    (B) Paragraph (e)(4)(iv) of this section applies to the individual.
    (ii) Disability defined for individual who is age 18 or older. An 
individual who, as of the date of the employee's death, is age 18 or 
older is disabled if, as of that date, the individual is unable

[[Page 58915]]

to engage in any substantial gainful activity by reason of any 
medically determinable physical or mental impairment that can be 
expected to result in death or to be of long-continued and indefinite 
duration.
    (iii) Disability defined for individual who is not age 18 or older. 
An individual who, as of the date of the employee's death, is not age 
18 or older is disabled if, as of that date, that individual has a 
medically determinable physical or mental impairment that results in 
marked and severe functional limitations and that can be expected to 
result in death or to be of long-continued and indefinite duration.
    (iv) Use of social security disability determination. If the 
Commissioner of Social Security has determined that, as of the date of 
the employee's death, an individual is disabled within the meaning of 
42 U.S.C. 1382c(a)(3), then that individual will be deemed to be 
disabled within the meaning of this paragraph (e)(4).
    (5) Chronically ill individual. An individual is chronically ill if 
the individual is chronically ill within the definition of section 
7702B(c)(2) and satisfies the documentation requirements of paragraph 
(e)(7) of this section. However, for purposes of the preceding 
sentence, an individual will be treated as chronically ill under 
section 7702B(c)(2)(A)(i) only if there is a certification from a 
licensed health care practitioner (as that term is defined in section 
7702B(c)(4)) that, as of the date of the certification, the individual 
is unable to perform (without substantial assistance from another 
individual) at least 2 activities of daily living and the period of 
that inability is an indefinite one that is reasonably expected to be 
lengthy in nature.
    (6) Individual not more than 10 years younger than the employee. 
Whether a designated beneficiary is not more than 10 years younger than 
the employee is determined based on the dates of birth of the employee 
and the beneficiary. Thus, for example, if an employee's date of birth 
is October 1, 1953, then the employee's beneficiary is not more than 10 
years younger than the employee if the beneficiary was born on or 
before October 1, 1963.
    (7) Documentation requirements for disabled or chronically ill 
individuals. This paragraph (e)(7) is satisfied with respect to an 
individual described in paragraph (e)(1)(iii) or (iv) of this section 
if documentation of the disability or chronic illness described in 
paragraph (e)(4) or (5) of this section, respectively, is provided to 
the plan administrator by October 31 of the calendar year following the 
calendar year of the employee's death (or October 31, 2025, if later). 
For individuals described in paragraph (e)(1)(iv) of this section, the 
documentation must include a certification from a licensed health care 
practitioner (as that term is defined in section 7702B(c)(4)).
    (8) Applicability of definition of eligible designated beneficiary 
to beneficiary of surviving spouse. In a case to which Sec.  
1.401(a)(9)-3(e) applies, a designated beneficiary of the employee's 
surviving spouse is an eligible designated beneficiary provided that 
designated beneficiary would be an eligible designated beneficiary 
described in paragraph (e)(1) of this section if that paragraph were to 
be applied by substituting the surviving spouse for the employee.
    (9) Examples. The following examples illustrate the rules of this 
paragraph (e).
    (i) Example 1. Employer M maintains a defined contribution plan, 
Plan X. Employee A designates A's child, B, as the sole beneficiary of 
A's interest in Plan X. B will not reach the age of majority until 
2024. A dies on July 1, 2022, after A's required beginning date. As of 
the date of A's death, B is disabled within the meaning of paragraph 
(e)(4) of this section. On November 1, 2024, B satisfies the 
requirements of paragraph (e)(7) of this section by providing the plan 
administrator a letter from a licensed health care practitioner stating 
that, as of July 1, 2022, B is unable to engage in any substantial 
gainful activity by reason of a physical impairment that can be 
expected to be of long-continued and indefinite duration. Due to B's 
disability, B remains an eligible designated beneficiary even after 
reaching the age of majority in 2024, and Plan X is not required to 
distribute A's remaining interest in the plan by the end of 2034 
pursuant to the rules of Sec.  1.401(a)(9)-5(e)(4), but instead may 
continue life expectancy payments to B during B's lifetime.
    (ii) Example 2. The facts are the same as in paragraph (e)(9)(i) of 
this section (Example 1), except that the documentation requirements of 
paragraph (e)(7) of this section are not timely satisfied with respect 
to B. B ceases to be an eligible designated beneficiary upon reaching 
the age of majority in 2024, and Plan X is required to distribute A's 
remaining interest in the plan by the end of 2034 pursuant to the rules 
of Sec.  1.401(a)(9)-5(e)(4).
    (iii) Example 3. The facts are the same as in paragraph (e)(9)(i) 
of this section (Example 1), except that B becomes disabled in 2023 
(after A's death in 2022). Because B was not disabled as of the date of 
A's death, B ceases to be an eligible designated beneficiary upon 
reaching the age of majority in 2024, and Plan X is required to 
distribute A's remaining interest in the plan by the end of 2034 
pursuant to the rules of Sec.  1.401(a)(9)-5(e)(4).
    (f) Special rules for trusts--(1) Look-through of trust to 
determine designated beneficiaries--(i) In general. If a trust that is 
designated as the beneficiary of an employee under a plan meets the 
requirements of paragraph (f)(2) of this section, then certain 
beneficiaries of the trust that are described in paragraph (f)(3) of 
this section (and not the trust itself) are treated as having been 
designated as beneficiaries of the employee under the plan, provided 
that those beneficiaries are not disregarded under paragraph (c)(2) of 
this section. A trust described in the preceding sentence is referred 
to as a see-through trust.
    (ii) Types of trusts. The determination of which beneficiaries of a 
see-through trust are treated as having been designated as 
beneficiaries of the employee under the plan depends on whether the 
see-through trust is a conduit trust or an accumulation trust. For this 
purpose--
    (A) The term conduit trust means a see-through trust, the terms of 
which provide that, with respect to the deceased employee's interest in 
the plan, all distributions will, upon receipt by the trustee, be paid 
directly to, or for the benefit of, specified trust beneficiaries; and
    (B) The term accumulation trust means any see-through trust that is 
not a conduit trust.
    (2) Trust requirements. The requirements of this paragraph (f)(2) 
are met if, during any period for which required minimum distributions 
are being determined by treating the beneficiaries of the trust as 
having been designated as beneficiaries of the employee under the plan, 
the following requirements are met--
    (i) The trust is a valid trust under State law or would be but for 
the fact that there is no corpus.
    (ii) The trust is irrevocable or will, by its terms, become 
irrevocable upon the death of the employee.
    (iii) The beneficiaries of the trust who are beneficiaries with 
respect to the trust's interest in the employee's interest in the plan 
are identifiable (within the meaning of paragraph (f)(5) of this 
section) from the trust instrument.
    (iv) The documentation requirements in paragraph (h) of this 
section have been satisfied.
    (3) Trust beneficiaries treated as beneficiaries of the employee--
(i) In general. Subject to the rules of

[[Page 58916]]

paragraphs (f)(3)(ii) and (iii) of this section, the following 
beneficiaries of a see-through trust are treated as having been 
designated as beneficiaries of the employee under the plan--
    (A) Any beneficiary that could receive amounts in the trust 
representing the employee's interest in the plan that are neither 
contingent upon, nor delayed until, the death of another trust 
beneficiary who did not predecease (and who is not treated as having 
predeceased) the employee; and
    (B) Any beneficiary of an accumulation trust that could receive 
amounts in the trust representing the employee's interest in the plan 
that were not distributed to beneficiaries described in paragraph 
(f)(3)(i)(A) of this section.
    (ii) Certain trust beneficiaries disregarded--(A) Entitlement 
conditioned on death of beneficiary. Any beneficiary of an accumulation 
trust who could receive amounts from the trust representing the 
employee's interest in the plan solely because of the death of another 
beneficiary described in paragraph (f)(3)(i)(B) of this section is not 
treated as having been designated as a beneficiary of the employee 
under the plan. The preceding sentence does not apply if the deceased 
beneficiary described in paragraph (f)(3)(i)(B) of this section--
    (1) Predeceased (or is treated as having predeceased) the employee; 
or
    (2) Also is described in paragraph (f)(3)(i)(A) of this section.
    (B) Entitlement conditioned on death of young individual. If a 
beneficiary of a see-through trust is an individual who is treated as a 
beneficiary of the employee under paragraph (f)(3)(i)(A) of this 
section, and the terms of the trust require full distribution of 
amounts in the trust representing the employee's interest in the plan 
to that individual by the later of the end of the calendar year 
following the calendar year of the employee's death or the end of the 
calendar year that includes the tenth anniversary of the date on which 
that individual reaches the age of majority (within the meaning of 
paragraph (e)(3) of this section), then any other beneficiary of the 
trust who could receive amounts in the trust representing the 
employee's interest in the plan if that individual dies before full 
distribution to that individual is made is not treated as having been 
designated as a beneficiary of the employee under the plan. The 
preceding sentence does not apply if the beneficiary who could receive 
amounts in the trust conditioned on the death of that individual also 
is described in paragraph (f)(3)(i)(A) of this section.
    (iii) Certain accumulations disregarded. For purposes of this 
paragraph (f)(3), a trust will not fail to be treated as a conduit 
trust merely because the trust terms requiring that distributions from 
the plan, upon receipt by the trustee, are paid directly to, or for the 
benefit of, trust beneficiaries do not apply after the death of all of 
the beneficiaries described in paragraph (f)(3)(i)(A) of this section.
    (iv) Treatment of payments for the benefit of a trust beneficiary. 
For purposes of this paragraph (f)(3), a trust beneficiary will be 
treated as if the beneficiary could receive amounts in the trust 
representing the employee's interest in the plan regardless of whether 
those amounts could be paid to that beneficiary or for the benefit of 
that beneficiary. Thus, for example, if a trust beneficiary is a minor 
child of the employee, payments that could be made to a custodial 
account for the benefit of that child are treated as amounts that could 
be received by the child.
    (4) Multiple trust arrangements. If a beneficiary of a see-through 
trust is another trust, the beneficiaries of the second trust will be 
treated as beneficiaries of the first trust, provided that the 
requirements of paragraph (f)(2) of this section are satisfied with 
respect to the second trust. In that case, the beneficiaries of the 
second trust are treated as having been designated as beneficiaries of 
the employee under the plan.
    (5) Identifiability of trust beneficiaries--(i) In general. Except 
as otherwise provided in this paragraph (f)(5), trust beneficiaries 
described in paragraph (f)(3) of this section are identifiable if it is 
possible to identify each person eligible to receive a portion of the 
employee's interest in the plan through the trust. For this purpose, 
the specificity requirements of paragraph (a)(3) of this section apply.
    (ii) Power of appointment--(A) Exercise or release of power of 
appointment by September 30. A trust does not fail to satisfy the 
identifiability requirements of this paragraph (f)(5) merely because an 
individual (powerholder) has the power to appoint a portion of the 
employee's interest to one or more beneficiaries that are not 
identifiable within the meaning of paragraph (f)(5)(i) of this section. 
If the power of appointment is exercised in favor of one or more 
identifiable beneficiaries by September 30 of the calendar year 
following the calendar year of the employee's death, then those 
identifiable beneficiaries are treated as beneficiaries designated 
under the plan. The preceding sentence also applies if, by that 
September 30, in lieu of exercising the power of appointment, the 
powerholder restricts it so that the power can be exercised at a later 
time in favor of only two or more identifiable beneficiaries (in which 
case, those identified beneficiaries are treated as beneficiaries 
designated under the plan). However, if, by that September 30, the 
power of appointment is not exercised (or restricted) in favor of one 
or more beneficiaries that are identifiable within the meaning of 
paragraph (f)(5)(i) of this section, then each taker in default (that 
is, any person that is entitled to the portion that represents the 
employee's interest in the plan subject to the power of appointment in 
the absence of the powerholder's exercise of the power) is treated as a 
beneficiary designated under the plan.
    (B) Exercise of power of appointment after September 30 of the 
calendar year following the calendar year of the employee's death. If 
an individual has a power of appointment to appoint a portion of the 
employee's interest to one or more beneficiaries and the individual 
exercises the power of appointment after September 30 of the calendar 
year following the calendar year of the employee's death, then the 
rules of paragraph (f)(5)(iv) of this section apply with respect to any 
trust beneficiary that is added pursuant to the exercise of the power 
of appointment.
    (iii) Modification of trust terms--(A) State law will not cause 
trust to fail to satisfy identifiability requirement. A trust will not 
fail to satisfy the identifiability requirements of this paragraph 
(f)(5) merely because the trust is subject to State law that permits 
the trust terms to be modified after the death of the employee (such as 
through a court reformation or a permitted decanting) and thus, permits 
changing the beneficiaries of the trust.
    (B) Modification of trust to remove trust beneficiaries. If a trust 
beneficiary described in paragraph (f)(3) of this section is removed 
pursuant to a modification of trust terms (such as through a court 
reformation or a permitted decanting) by September 30 of the calendar 
year following the calendar year of the employee's death, then that 
person is disregarded in determining the employee's designated 
beneficiary.
    (C) Modification of trust to add trust beneficiaries. If a trust 
beneficiary described in paragraph (f)(3) of this section is added 
through a modification of trust terms (such as through a court 
reformation or a permitted decanting) on or before September 30 of the 
calendar year following the calendar

[[Page 58917]]

year of the employee's death, then paragraph (c) of this section will 
apply taking into account the beneficiary that was added. If the 
beneficiary is added after that September 30, then the rules of 
paragraph (f)(5)(iv) of this section will apply with respect to the 
addition of that beneficiary.
    (iv) Addition of beneficiary after September 30. If, after 
September 30 of the calendar year following the calendar year of the 
employee's death, a trust beneficiary described in paragraph (f)(3) of 
this section is added as a trust beneficiary (whether through the 
exercise of a power of appointment, the modification of trust terms, or 
otherwise), then--
    (A) The addition of the beneficiary will not cause the trust to 
fail to satisfy the identifiability requirements of this paragraph 
(f)(5);
    (B) Beginning in the calendar year following the calendar year in 
which the new trust beneficiary was added, the rules of Sec.  
1.401(a)(9)-5(f)(1) will apply taking into account the new beneficiary 
and all of the beneficiaries of the trust that were treated as 
beneficiaries of the employee before the addition of the new 
beneficiary; and
    (C) Subject to paragraph (f)(5)(v) of this section, the rules of 
paragraphs (b) and (e)(2) of this section and Sec.  1.401(a)(9)-5(f)(2) 
will apply taking into account the new beneficiary and all of the 
beneficiaries of the trust that were treated as beneficiaries of the 
employee before the addition of the new beneficiary.
    (v) Delay in full distribution requirement. This paragraph 
(f)(5)(v) provides a special rule that applies if a full distribution 
of the employee's entire interest in the plan is not required in a 
calendar year pursuant to Sec.  1.401(a)(9)-5(e), but a beneficiary is 
added in that calendar year. In that case, if, taking into account the 
added beneficiary pursuant to paragraph (f)(5)(iv)(C) of this section, 
a full distribution of the employee's entire interest in the plan would 
have been required in that calendar year or an earlier calendar year, 
then a full distribution of the employee's entire interest in the plan 
will not be required until the end of the calendar year following the 
calendar year in which the beneficiary is added. For example, if life 
expectancy payments are being made to an eligible designated 
beneficiary and, more than 10 years after the employee's death, a 
beneficiary is added who is not an eligible designated beneficiary as 
described in paragraph (e) of this section, then the employee is 
treated as not having an eligible designated beneficiary for purposes 
of Sec.  1.401(a)(9)-5(e)(2) (so that a full distribution of the 
employee's entire interest in the plan would have been required within 
10 years of the employee's death). However, pursuant to this paragraph 
(f)(5)(v), the full distribution of the employee's entire interest in 
the plan is not required until the end of the calendar year following 
the calendar year in which the new trust beneficiary was added.
    (6) Examples. The following examples illustrate the see-through 
trust rules of this paragraph (f).
    (i) Example 1--(A) Facts. Employer L maintains a defined 
contribution plan, Plan W. Unmarried Employee C died in 2024 at age 30. 
Prior to C's death, C named a testamentary trust (Trust T) that 
satisfies the requirements of paragraph (f)(2) of this section, as the 
beneficiary of C's interest in Plan W. The terms of Trust T require 
that all distributions received from Plan W, upon receipt by the 
trustee, be paid directly to D, C's sibling, who is 5 years older than 
C. The terms of Trust T also provide that, if D dies before C's entire 
account balance has been distributed to D, E will be the beneficiary of 
C's remaining account balance.
    (B) Analysis. Pursuant to paragraph (f)(1)(ii)(A) of this section, 
Trust T is a conduit trust. Because Trust T is a conduit trust (meaning 
the residual beneficiary rule in paragraph (f)(3)(i)(B) of this section 
does not apply) and because E is only entitled to any portion of C's 
account if D dies before the entire account has been distributed, E is 
disregarded in determining C's designated beneficiary. Because D is an 
eligible designated beneficiary, D may use the life expectancy rule of 
Sec.  1.401(a)(9)-3(c)(4). Accordingly, even if D dies before C's 
entire interest in Plan W is distributed to Trust T, D's life 
expectancy continues to be used to determine the applicable 
denominator. Note, however, that because Sec.  1.401(a)(9)-5(e)(3) 
applies in this situation, a distribution of C's entire interest in 
Plan W will be required no later than the end of the calendar year that 
includes the tenth anniversary of D's death.
    (ii) Example 2--(A) Facts related to plan and beneficiary. Employer 
M maintains a defined contribution plan, Plan X. Employee A died in 
2024 at the age of 55, survived by Spouse B, who was then 50 years old. 
A's account balance in Plan X is invested only in productive assets and 
was includible in A's gross estate under section 2039. A named a 
testamentary trust (Trust P) as the beneficiary of all amounts payable 
from A's account in Plan X after A's death. Trust P satisfies the see-
through trust requirements of paragraph (f)(2) of this section.
    (B) Facts related to trust. Under the terms of Trust P, all trust 
income is payable annually to B, and no one has the power to appoint or 
distribute Trust P principal to any person other than B. A's sibling, 
C, who is less than 10 years younger than A (and thus is an eligible 
designated beneficiary) and is younger than B, is the sole residual 
beneficiary of Trust P. Also, under the terms of Trust P, if C 
predeceases B, then, upon B's death, all Trust P principal is 
distributed to Charity Z (an organization exempt from tax under section 
501(c)(3)). No other person has a beneficial interest in Trust P. Under 
the terms of Trust P, B has the power, exercisable annually, to compel 
the trustee to withdraw from A's account balance in Plan X an amount 
equal to the income earned during the calendar year on the assets held 
in A's account in Plan X and to distribute that amount through Trust P 
to B. Plan X includes no prohibition on withdrawal from A's account of 
amounts in excess of the annual required minimum distributions under 
section 401(a)(9). In accordance with the terms of Plan X, the trustee 
of Trust P elects to take annual life expectancy payments pursuant to 
section 401(a)(9)(B)(iii). If B exercises the withdrawal power, the 
trustee must withdraw from A's account under Plan X the greater of the 
amount of income earned in the account during the calendar year or the 
required minimum distribution. However, under the terms of Trust P, and 
applicable State law, only the portion of the Plan X distribution 
received by the trustee equal to the income earned by A's account in 
Plan X is required to be distributed to B (along with any other trust 
income).
    (C) Analysis. Because Trust P does not require that distributions 
from A's account in Plan X to Trust P, upon receipt by the trustee, be 
paid directly to (or for the benefit of) B, Trust P is not a conduit 
trust and accordingly is an accumulation trust (as described in 
paragraph (f)(1)(ii)(B) of this section). Pursuant to paragraph 
(f)(3)(i)(B) of this section, C, as the residual beneficiary of Trust 
P, is treated as a beneficiary designated under Plan X (even though 
access to those amounts is delayed until after B's death). Pursuant to 
paragraph (f)(2)(iii)(A) of this section, because Charity Z's 
entitlement to amounts in the trust is based on the death of a 
beneficiary described in paragraph (f)(3)(i)(B) of this section who is 
not also described in paragraph (f)(3)(i)(A) of this section, Charity Z 
is disregarded as a beneficiary of A. Under Sec.  1.401(a)(9)-

[[Page 58918]]

5(f)(1), the designated beneficiary used to determine the applicable 
denominator is the oldest of the designated beneficiaries of Trust P's 
interest in Plan X. B is the oldest of the beneficiaries of Trust P's 
interest in Plan X (including residual beneficiaries). Thus, the 
applicable denominator for purposes of section 401(a)(9)(B)(iii) is B's 
life expectancy. Because C is a beneficiary of A's account in Plan X in 
addition to B, B is not the sole beneficiary of A's account and the 
special rule in section 401(a)(9)(B)(iv) and Sec.  1.401(a)(9)-3(d) is 
not available. Accordingly, the annual required minimum distributions 
from the account to Trust P must begin no later than the end of the 
calendar year following the calendar year of A's death.
    (iii) Example 3--(A) Facts. The facts are the same as in paragraph 
(f)(6)(ii) of this section (Example 2), except that C is more than 10 
years younger than A, meaning that at least one of the beneficiaries of 
Trust P's interest in Plan X is not an eligible designated beneficiary.
    (B) Analysis. Pursuant to paragraph (e)(2)(i) of this section, A is 
treated as not having an eligible designated beneficiary. Pursuant to 
Sec.  1.401(a)(9)-3(c)(5), the trustee of Trust P is not permitted to 
make an election to take annual life expectancy distributions and the 
10-year rule of Sec.  1.401(a)(9)-3(c)(3) applies.
    (iv) Example 4--(A) Facts related to plan and beneficiary. Employer 
N maintains a defined contribution plan, Plan Y. Employee F died in 
2025 at the age of 60. F named a testamentary trust (Trust Q), which 
was established under F's will, as the beneficiary of all amounts 
payable from F's account in Plan X after F's death. Trust Q satisfies 
the see-through trust requirements of paragraph (f)(2) of this section.
    (B) Facts related to trust. Under the terms of Trust Q, all trust 
income is payable to F's surviving spouse G for life, no person has the 
power to appoint or distribute Trust Q principal to any person other 
than G, and G has a testamentary power of appointment to name the 
beneficiaries of the remainder in Trust Q. The power of appointment 
provides that, if G does not exercise the power, then upon G's death, 
F's descendants, per stirpes, are entitled to the remainder interest in 
Trust Q. As of the date of F's death, F has two children, K and L, 
neither of whom is disabled, chronically ill, or under age 21. Before 
September 30 of the calendar year following the calendar year in which 
F died, G irrevocably restricts G's power of appointment so that G may 
exercise the power to appoint the remainder beneficiaries of Trust Q 
only in favor of G's siblings (who all are less than 10 years younger 
than F and thus, are eligible designated beneficiaries).
    (C) Analysis. Pursuant to paragraph (f)(5)(ii)(A) of this section, 
because G timely restricted the power of appointment so that G may 
exercise the power to appoint the residual interest in Trust Q only in 
favor of G's siblings, the designated beneficiaries are G and G's 
siblings. Because all of the designated beneficiaries are eligible 
designated beneficiaries, annual life expectancy payments are permitted 
under section 401(a)(9)(B)(iii). Note, however, that because Sec.  
1.401(a)(9)-5(e)(3) applies, a distribution of the remaining interest 
is required by no later than 10 years after the calendar year in which 
the oldest of G and G's siblings dies.
    (v) Example 5--(A) Facts. The facts are the same as in paragraph 
(f)(6)(iv) of this section (Example 4), except that G does not restrict 
the power by September 30 of the calendar year following the calendar 
year of F's death.
    (B) Analysis. Pursuant to paragraph (f)(5)(ii)(A) of this section, 
G, K, and L are treated as F's beneficiaries. Pursuant to Sec.  
1.401(a)(9)-3(c)(5), because K and L are not eligible designated 
beneficiaries, the trustee of Trust Q is not permitted to make an 
election to take annual life expectancy distributions, and the 10-year 
rule of Sec.  1.401(a)(9)-3(c)(3) applies.
    (g) Applicable multi-beneficiary trust--(1) Certain see-through 
trusts with disabled or chronically ill beneficiaries. An applicable 
multi-beneficiary trust is a see-through trust with more than one 
beneficiary and with respect to which--
    (i) All of the trust beneficiaries are designated beneficiaries;
    (ii) The trust terms identify one or more individuals, each of whom 
is disabled (as defined in paragraph (e)(1)(iii) of this section) or 
chronically ill (as defined in paragraph (e)(1)(iv) of this section), 
who are described in paragraph (f)(3)(i)(A) of this section; and
    (iii) The terms of the trust provide that no beneficiary (other 
than an individual described in paragraph (g)(1)(ii) of this section) 
has any right to the employee's interest in the plan until the death of 
all of the eligible designated beneficiaries described in paragraph 
(g)(1)(ii) of this section.
    (2) Termination of interest in trust. A provision in the trust 
agreement that permits the termination of the interest in the trust of 
a beneficiary described in paragraph (g)(1)(ii) of this section prior 
to that beneficiary's death will not cause the trust to fail to be 
treated as an applicable multi-beneficiary trust, but only if paragraph 
(g)(1)(iii) of this section continues to apply. Upon the death of the 
last to survive of the beneficiaries described in paragraph (g)(1)(ii) 
of this section, the trust is treated as having been modified as of the 
date of that death to add the other trust beneficiaries. Thus, if the 
death occurs after September 30 of the calendar year following the 
calendar year of the employee's death, the rules of paragraph 
(f)(5)(iv) of this section will apply.
    (3) Special definition of designated beneficiary. For purposes of 
paragraph (g)(1)(i) of this section, any beneficiary that is an 
organization described in section 408(d)(8)(B)(i) (certain 
organizations to which a charitable contribution may be made) is 
treated as a designated beneficiary.
    (h) Documentation requirements for trusts--(1) General rule. The 
documentation requirements of this paragraph (h) are satisfied if--
    (i) With respect to required minimum distributions for a 
distribution calendar year that begins on or before the date of the 
employee's death, paragraph (h)(2) of this section is satisfied no 
later than the first day of the distribution calendar year; or
    (ii) With respect to required minimum distributions for a 
distribution calendar year that begins after the date of the employee's 
death, or that begins after the employee's surviving spouse has died in 
a case to which Sec.  1.401(a)(9)-3(d) applies, paragraph (h)(3) of 
this section is satisfied no later than October 31 of the calendar year 
following the calendar year that includes the employee's date of death 
or the date of death of the employee's surviving spouse, respectively.
    (2) Required minimum distributions while employee is still alive--
(i) In general. If an employee designates a trust as the beneficiary of 
the employee's entire benefit and the employee's spouse is the only 
beneficiary of the trust treated as a beneficiary of the employee 
pursuant to the rules of paragraph (f) of this section, then, in order 
to satisfy the documentation requirements of this paragraph (h)(2) (so 
that the applicable denominator for a distribution calendar year may be 
determined under the rules of Sec.  1.401(a)(9)-5(c)(2), assuming the 
other requirements of paragraph (f)(2) of this section are satisfied), 
the employee must satisfy either the requirements of paragraph 
(h)(2)(ii) of this section (requiring the employee to provide a copy of 
the trust instrument) or the requirements of paragraph (h)(2)(iii) of 
this section (requiring the employee to provide a list of 
beneficiaries). The plan administrator may determine which of

[[Page 58919]]

the two alternatives in the preceding sentence is available to the 
employee.
    (ii) Employee to provide copy of trust instrument. An employee 
satisfies the requirements of this paragraph (h)(2)(ii) if the 
employee--
    (A) Provides the plan administrator a copy of the trust instrument; 
and
    (B) Agrees that, if the trust instrument is amended at any time in 
the future, the employee will, within a reasonable time, provide the 
plan administrator a copy of each amendment.
    (iii) Employee to provide list of beneficiaries. An employee 
satisfies the requirements of this paragraph (h)(2)(iii) if the 
employee--
    (A) Provides the plan administrator a list of all of the 
beneficiaries of the trust (including contingent beneficiaries) with a 
description of the conditions on their entitlement sufficient to 
establish that the spouse is the only beneficiary of the trust treated 
as a beneficiary of the employee pursuant to the rules of paragraph (f) 
of this section;
    (B) Certifies that, to the best of the employee's knowledge, the 
list described in paragraph (h)(2)(iii)(A) of this section is correct 
and complete and that the requirements of paragraphs (f)(2)(i) through 
(iii) of this section are satisfied; and
    (C) Agrees that, if the trust instrument is amended at any time in 
the future, the employee will, within a reasonable time, provide the 
plan administrator corrected certifications to the extent that the 
amendment changes any information previously certified; and
    (D) Agrees to provide a copy of the trust instrument to the plan 
administrator upon request.
    (3) Required minimum distributions after death--(i) In general. In 
order to satisfy the documentation requirement of this paragraph (h)(3) 
for required minimum distributions after the death of the employee (or 
after the death of the employee's surviving spouse in a case to which 
Sec.  1.401(a)(9)-3(d) applies), the trustee of the trust must satisfy 
the requirements of either paragraph (h)(3)(ii) (requiring the trustee 
to provide a list of beneficiaries) or paragraph (h)(3)(iii) of this 
section (requiring the trustee to provide a copy of the trust 
instrument). The plan administrator may determine which of the two 
alternatives in the preceding sentence is available for the trust.
    (ii) Trustee to provide list of beneficiaries. A trustee satisfies 
the requirements of this paragraph (h)(3)(ii) if the trustee--
    (A) Provides the plan administrator a final list of all 
beneficiaries of the trust as of September 30 of the calendar year 
following the calendar year of the death (including contingent 
beneficiaries) with a description of the conditions on their 
entitlement sufficient to establish which of those beneficiaries are 
treated as beneficiaries of the employee (or surviving spouse, if 
applicable);
    (B) Certifies that, to the best of the trustee's knowledge, this 
list is correct and complete and that the requirements of paragraphs 
(f)(2)(i) through (iii) of this section are satisfied; and
    (C) Agrees to provide a copy of the trust instrument to the plan 
administrator upon request.
    (iii) Trustee to provide copy of trust instrument. A trustee 
satisfies the requirements of this paragraph (h)(3)(iii) if the trustee 
provides the plan administrator with a copy of the actual trust 
document for the trust that is named as a beneficiary of the employee 
under the plan as of the employee's date of death.
    (4) Relief for discrepancy between trust instrument and employee 
certifications or earlier trust instruments--(i) In general. If 
required minimum distributions are determined based on the information 
provided to the plan administrator in certifications or trust 
instruments described in paragraph (h)(2) or (3) of this section, a 
plan will not fail to satisfy section 401(a)(9) merely because the 
actual terms of the trust instrument are inconsistent with the 
information in those certifications or trust instruments previously 
provided to the plan administrator, but only if--
    (A) The plan administrator reasonably relied on the information 
provided; and
    (B) The required minimum distributions for calendar years after the 
calendar year in which the discrepancy is discovered are determined 
based on the actual terms of the trust instrument.
    (ii) Excise tax. For purposes of determining the amount of the 
excise tax under section 4974, the required minimum distribution is 
determined for any year based on the actual terms of the trust in 
effect during the year.


Sec.  1.401(a)(9)-5  Required minimum distributions from defined 
contribution plans.

    (a) General rules--(1) In general. Subject to the rules of 
paragraph (e) of this section (requiring distribution of an employee's 
entire interest by a specified deadline in certain situations), if an 
employee's accrued benefit is in the form of an individual account 
under a defined contribution plan, the minimum amount required to be 
distributed for each distribution calendar year beginning with the 
first distribution calendar year for the employee or designated 
beneficiary (as determined under paragraph (a)(2) of this section) is 
equal to the quotient obtained by dividing the account balance 
(determined under paragraph (b) of this section) by the applicable 
denominator (determined under paragraph (c) or (d) of this section, 
whichever applies). However, the required minimum distribution amount 
will never exceed the entire account balance on the date of the 
distribution. See paragraph (g)(1) of this section for rules that apply 
if a portion of the employee's account is not vested.
    (2) Distribution calendar year--(i) In general. A calendar year for 
which a minimum distribution is required is a distribution calendar 
year.
    (ii) First distribution calendar year for employee if employee dies 
on or after required beginning date. If an employee's required 
beginning date is April 1 of the calendar year following the calendar 
year in which the employee attains the applicable age, then the 
employee's first distribution calendar year is the year the employee 
attains the applicable age. If an employee's required beginning date is 
April 1 of the calendar year following the calendar year in which the 
employee retires, the employee's first distribution calendar year is 
the calendar year in which the employee retires.
    (iii) First distribution calendar year for designated beneficiary 
if employee dies before required beginning date. In the case of an 
employee who dies before the required beginning date, if the life 
expectancy rule in Sec.  1.401(a)(9)-3(c)(4) applies, then the first 
distribution calendar year for the designated beneficiary is the 
calendar year following the calendar year in which the employee died 
(or, if applicable, the calendar year described in Sec.  1.401(a)(9)-
3(d)). See Sec.  1.401(a)(9)-3(c)(5) to determine whether the life 
expectancy rule applies.
    (3) Time for distributions. The distribution required for the 
employee's first distribution calendar year (as described in paragraph 
(a)(2)(ii) of this section) may be made on or before April 1 of the 
following calendar year. The required minimum distribution for any 
other distribution calendar year (including the required minimum 
distribution for the distribution calendar year in which the employee's 
required beginning date occurs or the first distribution calendar year 
for the designated beneficiary) must be made on or before the end of 
that distribution calendar year.
    (4) Minimum distribution incidental benefit requirement. If 
distributions of an employee's account balance under a

[[Page 58920]]

defined contribution plan are made in accordance with this section--
    (i) With respect to the retirement benefits provided by that 
account balance, to the extent the incidental benefit requirement of 
Sec.  1.401-1(b)(1)(i) requires distributions, that requirement is 
deemed satisfied; and
    (ii) No additional distributions are required to satisfy section 
401(a)(9)(G).
    (5) Annuity contracts--(i) Purchase of annuity contract permitted. 
A plan may satisfy section 401(a)(9) by the purchase of an annuity 
contract from an insurance company in accordance with Sec.  
1.401(a)(9)-6(d) with the employee's entire individual account, 
provided that the terms of the annuity satisfy Sec.  1.401(a)(9)-6. 
However, a distribution of an annuity contract is not a distribution 
for purposes of this section.
    (ii) Transition from defined contribution rules to defined benefit 
rules. If an annuity is purchased in accordance with paragraph 
(a)(5)(i) of this section after distributions are required to commence 
(the required beginning date, in the case of distributions commencing 
before death, or the calendar year determined under Sec.  1.401(a)(9)-
3(c)(4) or, if applicable, Sec.  1.401(a)(9)-3(d), in the case of 
distributions commencing after death), then the plan will satisfy 
section 401(a)(9) only if, in the year of purchase, distributions from 
the individual account satisfy this section, and for calendar years 
following the year of purchase, payments under the annuity contract are 
made in accordance with Sec.  1.401(a)(9)-6. Payments under the annuity 
contract during the year in which the annuity contract is purchased are 
treated as distributions from the individual account for purposes of 
determining whether the distributions from the individual account 
satisfy this section in the calendar year of purchase.
    (iii) Bifurcation if annuity contract is purchased with portion of 
employee's account. A portion of an employee's account balance under a 
defined contribution plan is permitted to be used to purchase an 
annuity contract while another portion remains in the account, provided 
that the requirements of paragraphs (a)(5)(i) and (ii) of this section 
are satisfied (other than the requirement that the contract be 
purchased with the employee's entire individual account). In that case, 
in order to satisfy section 401(a)(9) for calendar years after the 
calendar year of purchase, the remaining account balance under the plan 
must be distributed in accordance with this section.
    (iv) Optional aggregation rule. In the case of an annuity contract 
purchased with a portion of the employee's account balance, in lieu of 
applying section 401(a)(9) separately with respect to the annuity 
contract and the remaining account balance as described in paragraph 
(a)(5)(iii) of this section, a plan may permit an employee to elect to 
satisfy section 401(a)(9) for the annuity contract and that account 
balance in the aggregate by--
    (A) Adding the fair market value of the contract to the remaining 
account balance determined under paragraph (b) of this section; and
    (B) Treating payments under the annuity contract as distributions 
from the employee's individual account.
    (v) [Reserved]
    (6) Impact of additional distributions in prior years. If, for any 
distribution calendar year, the amount distributed exceeds the required 
minimum distribution for that calendar year, no credit towards a 
required minimum distribution will be given in subsequent calendar 
years for the excess distribution.
    (b) Determination of account balance--(1) General rule. In the case 
of an individual account under a defined contribution plan, the benefit 
used in determining the required minimum distribution for a 
distribution calendar year is the account balance as of the last 
valuation date in the calendar year preceding that distribution 
calendar year (valuation calendar year) adjusted in accordance with 
this paragraph (b). For this purpose, all of an employee's accounts 
under the plan are aggregated. Thus, all separate accounts, including a 
separate account for employee contributions under section 72(d)(2), are 
aggregated for purposes of this section.
    (2) Adjustment for subsequent allocations and distributions--(i) 
Subsequent allocations. The account balance is increased by the amount 
of any contributions or forfeitures allocated to the account balance as 
of dates in the valuation calendar year after the valuation date. For 
this purpose, contributions that are allocated to the account balance 
as of dates in the valuation calendar year after the valuation date, 
but that are not actually made during the valuation calendar year, may 
be excluded.
    (ii) Subsequent distributions. The account balance is decreased by 
distributions made in the valuation calendar year after the valuation 
date.
    (3) Adjustment for designated Roth accounts. For distribution 
calendar years up to and including the calendar year that includes the 
employee's date of death, the account balance does not include amounts 
held in a designated Roth account (as described in section 402A(b)(2)).
    (4) Exclusion for QLAC. The account balance does not include the 
value of any qualifying longevity annuity contract (QLAC), defined in 
Sec.  1.401(a)(9)-6(q), that is held under the plan.
    (5) Treatment of rollovers. If an amount is distributed from a plan 
and rolled over to another plan (receiving plan), then the rules of 
Sec.  1.401(a)(9)-7(b) apply for purposes of determining the benefit 
and required minimum distribution under the receiving plan. If an 
amount is transferred from one plan (transferor plan) to another plan 
(transferee plan) in a transfer to which section 414(l) applies, then 
the rules of Sec. Sec.  1.401(a)(9)-7(c) and (d) apply for purposes of 
determining the amount of the benefit and required minimum distribution 
under both the transferor and transferee plans.
    (c) Determination of applicable denominator during employee's 
lifetime--(1) General rule. Except as provided in paragraph (c)(2) of 
this section (relating to a spouse beneficiary who is more than 10 
years younger than the employee), the applicable denominator for 
required minimum distributions for each distribution calendar year 
beginning with the employee's first distribution calendar year (as 
described in paragraph (a)(2)(ii) of this section) is determined using 
the Uniform Lifetime Table in Sec.  1.401(a)(9)-9(c) for the employee's 
age as of the employee's birthday in the relevant distribution calendar 
year. The requirement to take an annual distribution calculated in 
accordance with the preceding sentence applies for every distribution 
calendar year up to and including the calendar year that includes the 
employee's date of death. Thus, a required minimum distribution is due 
for the calendar year of the employee's death, and that amount must be 
distributed during that year to any beneficiary to the extent it has 
not already been distributed to the employee.
    (2) Spouse is sole beneficiary--(i) Determination of applicable 
denominator. If the employee's surviving spouse who is more than 10 
years younger than the employee is the employee's sole beneficiary, 
then the applicable denominator is the joint and last survivor life 
expectancy for the employee and spouse determined using the Joint and 
Last Survivor Table in Sec.  1.401(a)(9)-9(d) for the employee's and 
spouse's ages as of their birthdays in the relevant distribution 
calendar year (rather than the applicable

[[Page 58921]]

denominator determined under paragraph (c)(1) of this section).
    (ii) Spouse must be sole beneficiary at all times. Except as 
otherwise provided in paragraph (c)(2)(iii) of this section (relating 
to a death or divorce in a calendar year), the spouse is the sole 
beneficiary for purposes of determining the applicable denominator for 
a distribution calendar year during the employee's lifetime only if the 
spouse is the sole beneficiary of the employee's entire interest at all 
times during the distribution calendar year.
    (iii) Change in marital status. If the employee and the employee's 
spouse are married on January 1 of a distribution calendar year, but do 
not remain married throughout that year (that is, the employee or the 
employee's spouse dies or they become divorced during that year), the 
employee will not fail to have a spouse as the employee's sole 
beneficiary for that year merely because they are not married 
throughout that year. However, the change in beneficiary due to the 
death or divorce of the spouse in a distribution calendar year will be 
effective for purposes of determining the applicable denominator under 
section 401(a)(9) and this paragraph (c) for the following calendar 
years.
    (d) Applicable denominator after employee's death--(1) Death on or 
after the employee's required beginning date--(i) In general. If an 
employee dies after distribution has begun as determined under Sec.  
1.401(a)(9)-2(a)(3) (generally, on or after the employee's required 
beginning date), distributions must satisfy section 401(a)(9)(B)(i). In 
order to satisfy this requirement, the applicable denominator for 
distribution calendar years that begin after the employee's death is 
determined under the rules of this paragraph (d)(1) (or is determined 
under the rules of paragraph (g)(3) of this section, if applicable). 
The requirement to take an annual distribution in accordance with the 
preceding sentence continues to apply for every distribution calendar 
year until the employee's interest is fully distributed. Thus, a 
required minimum distribution is due for the calendar year of the 
beneficiary's death, and that amount must be distributed during that 
calendar year to any beneficiary of the deceased beneficiary to the 
extent it has not already been distributed to the deceased beneficiary. 
If section 401(a)(9)(H) applies to the employee's interest in the plan, 
then the distributions also must satisfy either section 
401(a)(9)(B)(ii) (applied by substituting 10 years for 5 years) or, if 
the beneficiary is an eligible designated beneficiary, section 
401(a)(9)(B)(iii) (taking into account sections 401(a)(9)(E)(iii) and 
401(a)(9)(H)(iii)). In order to satisfy those requirements, in addition 
to determining the applicable denominator under the rules of this 
paragraph (d)(1), the distributions must satisfy any applicable 
requirements under paragraph (e) of this section.
    (ii) Employee with designated beneficiary. If the employee has a 
designated beneficiary as of the date determined under Sec.  
1.401(a)(9)-4(c), the applicable denominator is the greater of--
    (A) The designated beneficiary's remaining life expectancy; and
    (B) The employee's remaining life expectancy.
    (iii) Employee with no designated beneficiary. If the employee does 
not have a designated beneficiary as of the date determined under Sec.  
1.401(a)(9)-4(c), the applicable denominator is the employee's 
remaining life expectancy.
    (2) Death before an employee's required beginning date. If an 
employee dies before distributions have begun (as determined under 
Sec.  1.401(a)(9)-2(a)(3)) and the life expectancy rule described in 
Sec.  1.401(a)(9)-3(c)(4) applies, then the applicable denominator for 
distribution calendar years beginning with the first distribution 
calendar year for the designated beneficiary (as described in paragraph 
(a)(2)(iii) of this section) is the designated beneficiary's remaining 
life expectancy (or is determined under the rules of paragraph (g)(3) 
of this section, if applicable).
    (3) Remaining life expectancy--(i) Life expectancy table. For 
purposes of this paragraph (d), all life expectancies are determined 
using the Single Life Table in Sec.  1.401(a)(9)-9(b).
    (ii) Employee's life expectancy. The employee's remaining life 
expectancy is determined initially using the employee's age as of the 
employee's birthday in the calendar year of the employee's death. In 
subsequent calendar years, the remaining life expectancy is determined 
by reducing that initial life expectancy by one for each calendar year 
that has elapsed after that first calendar year.
    (iii) Non-spouse designated beneficiary. If the designated 
beneficiary is not the employee's surviving spouse, then the designated 
beneficiary's remaining life expectancy is determined initially using 
the beneficiary's age as of the beneficiary's birthday in the calendar 
year following the calendar year of the employee's death. Except as 
otherwise provided in paragraph (d)(3)(iv) of this section, for 
subsequent calendar years, the designated beneficiary's remaining life 
expectancy is determined by reducing that initial life expectancy by 
one for each calendar year that has elapsed after that first calendar 
year.
    (iv) Spouse as designated beneficiary. If the surviving spouse of 
the employee is the employee's sole beneficiary, then the surviving 
spouse's remaining life expectancy is redetermined each distribution 
calendar year up to and including the calendar year of the spouse's 
death using the surviving spouse's age as of the surviving spouse's 
birthday in the distribution calendar year. For each calendar year 
following the calendar year of the spouse's death, the spouse's 
remaining life expectancy is determined by reducing the spouse's 
remaining life expectancy in the calendar year of the spouse's death by 
one for each calendar year that has elapsed after that calendar year.
    (e) Distribution of employee's entire interest required--(1) In 
general. Except as provided in paragraph (f) of this section, if an 
employee's accrued benefit is in the form of an individual account 
under a defined contribution plan, then the entire interest of the 
employee must be distributed by the end of the earliest of the calendar 
years described in paragraph (e)(2), (3), or (4) of this section. 
However, the preceding sentence does not apply if section 401(a)(9)(H) 
does not apply with respect to the employee (for example, if both the 
employee and the employee's designated beneficiary died before January 
1, 2020). See Sec.  1.401(a)(9)-1(b) for rules relating to the section 
401(a)(9)(H) effective date.
    (2) 10-year limit for designated beneficiary who is not an eligible 
designated beneficiary. If the employee's designated beneficiary is not 
an eligible designated beneficiary (as determined in accordance with 
Sec.  1.401(a)(9)-4(e)), then the calendar year described in this 
paragraph (e)(2) is the calendar year that includes the tenth 
anniversary of the date of the employee's death.
    (3) 10-year limit following death of eligible designated 
beneficiary. If the employee's designated beneficiary is an eligible 
designated beneficiary (as determined in accordance with Sec.  
1.401(a)(9)-4(e)), then the calendar year described in this paragraph 
(e)(3) is the calendar year that includes the tenth anniversary of the 
date of the designated beneficiary's death.
    (4) 10-year limit after minor child of the employee reaches age of 
majority. If the employee's designated beneficiary is an eligible 
designated beneficiary only because the beneficiary is the child of the 
employee who has not reached the age of majority at the time of the 
employee's death, then the calendar

[[Page 58922]]

year described in this paragraph (e)(4) is the calendar year that 
includes the tenth anniversary of the date the designated beneficiary 
reaches the age of majority.
    (f) Rules for multiple designated beneficiaries--(1) Determination 
of applicable denominator--(i) General rule. Except as otherwise 
provided in paragraph (f)(1)(ii) of this section and Sec.  1.401(a)(9)-
8(a), if the employee has more than one designated beneficiary, then 
the determination of the applicable denominator under paragraph (d) of 
this section is made using the oldest designated beneficiary of the 
employee.
    (ii) Applicable multi-beneficiary trusts. If an employee's 
beneficiary is an applicable multi-beneficiary trust described in Sec.  
1.401(a)(9)-4(g)(1), then only the trust beneficiaries described in 
Sec.  1.401(a)(9)-4(g)(1)(ii) are taken into account in determining the 
oldest designated beneficiary for purposes of paragraph (f)(1)(i) of 
this section.
    (2) Determination of when entire interest is required to be 
distributed--(i) General rule. Except as otherwise provided in 
paragraphs (f)(2)(ii) and (iii) of this section and Sec.  1.401(a)(9)-
8(a), if an employee has more than one designated beneficiary, then 
paragraph (e)(1) of this section is applied with respect to the oldest 
of the employee's designated beneficiaries.
    (ii) Special rule for employee's minor child. If any of the 
employee's designated beneficiaries is an eligible designated 
beneficiary because that designated beneficiary is described in Sec.  
1.401(a)(9)-4(e)(1)(ii) (relating to the child of the employee who has 
not reached the age of majority at the time of the employee's death), 
then--
    (A) Paragraph (e)(2) of this section does not apply;
    (B) Paragraph (e)(3) of this section applies as if the death of the 
employee's eligible designated beneficiary does not occur until the 
death of all of the designated beneficiaries who are described in Sec.  
1.401(a)(9)-4(e)(1)(ii); and
    (C) Paragraph (e)(4) of this section applies as if the attainment 
of the age of majority of the employee's eligible designated 
beneficiary described in Sec.  1.401(a)(9)-4(e)(1)(ii) does not occur 
until the youngest of those eligible designated beneficiaries reaches 
the age of majority.
    (iii) Applicable multi-beneficiary trust. If an employee's 
beneficiary is an applicable multi-beneficiary trust described in Sec.  
1.401(a)(9)-4(g)(1), then paragraph (e)(3) of this section applies as 
if the death of the employee's eligible designated beneficiary does not 
occur until the death of the last to survive of the trust beneficiaries 
who are described in Sec.  1.401(a)(9)-4(g)(1)(ii).
    (g) Special rules--(1) Treatment of nonvested amounts. If the 
employee's benefit is in the form of an individual account under a 
defined contribution plan, the benefit used to determine the required 
minimum distribution for any distribution calendar year will be 
determined in accordance with paragraph (a) of this section without 
regard to whether or not all of the employee's benefit is vested. If, 
as of the end of a distribution calendar year (or as of the employee's 
required beginning date, in the case of the employee's first 
distribution calendar year), the total amount of the employee's vested 
benefit is less than the required minimum distribution for the calendar 
year, only the vested portion, if any, of the employee's benefit is 
required to be distributed by the end of the calendar year (or, if 
applicable, by the employee's required beginning date). However, the 
required minimum distribution for the subsequent calendar year must be 
increased by the sum of amounts not distributed in prior calendar years 
because the employee's vested benefit was less than the required 
minimum distribution determined in accordance with paragraph (a) of 
this section.
    (2) Distributions taken into account--(i) General rule. Except as 
provided in this paragraph (g)(2), all amounts distributed from an 
individual account under a defined contribution plan are distributions 
that are taken into account in determining whether this section is 
satisfied for a calendar year, regardless of whether the amount is 
includible in income. Thus, for example, amounts that are excluded from 
income as recovery of investment in the contract under section 72 
generally are taken into account for purposes of determining whether 
this section is satisfied for a calendar year. Similarly, amounts 
excluded from income as net unrealized appreciation on employer 
securities generally are taken into account for purposes of satisfying 
this section.
    (ii) Amounts not eligible for rollover. An amount is not taken into 
account in determining whether this section is satisfied for a calendar 
year if that amount is described in Sec.  1.402(c)-2(c)(3) (relating to 
amounts that are not treated as eligible rollover distributions).
    (iii) [Reserved]
    (iv) [Reserved]
    (3) Surviving spouse election under section 401(a)(9)(B)(iv)--(i) 
In general. A defined contribution plan may include a provision, 
applicable to an employee whose sole beneficiary is that employee's 
surviving spouse, under which the surviving spouse may elect to be 
treated as the employee for purposes of determining the required 
minimum distribution for a calendar year under this section.
    (ii) [Reserved]


Sec.  1.401(a)(9)-6  Required minimum distributions for defined benefit 
plans and annuity contracts.

    (a) General rules--(1) In general. In order to satisfy section 
401(a)(9), except as otherwise provided in this section, distributions 
of the employee's entire interest under a defined benefit plan or under 
an annuity contract must be paid in the form of periodic annuity 
payments for the employee's life (or the joint lives of the employee 
and beneficiary) or over a period certain that does not exceed the 
maximum length of the period certain determined in accordance with 
paragraph (c) of this section. The interval between payments for the 
annuity must not exceed one year and, except as otherwise provided in 
this section, must be uniform over the entire distribution period. Once 
payments have commenced over a period, the period may only be changed 
in accordance with paragraph (n) of this section. Life (or joint and 
survivor) annuity payments must satisfy the minimum distribution 
incidental benefit requirements of paragraph (b) of this section. 
Except as otherwise provided in this section (for example, permitted 
increases described in paragraph (o) of this section), all payments 
(whether paid over an employee's life, joint lives, or a period 
certain) also must be nonincreasing.
    (2) Definition of life annuity. An annuity described in this 
section may be a life annuity (or joint and survivor annuity) with a 
period certain, provided that the life annuity (or joint and survivor 
annuity, if applicable) and the period certain payments each meet the 
requirements of paragraph (a)(1) of this section. For purposes of this 
section, if distributions are permitted to be made over the lives of 
the employee and the designated beneficiary, references to a life 
annuity include a joint and survivor annuity.
    (3) Annuity commencement--(i) First payment and frequency. Annuity 
payments must commence on or before the employee's required beginning 
date (within the meaning of Sec.  1.401(a)(9)-2(b)). The first payment, 
which must be made on or before the employee's required beginning date, 
must be the payment that is required for one payment interval. The 
second payment need not be made until the end of the next payment 
interval even if that payment interval ends in the next calendar year. 
Similarly, if the employee dies before the required beginning date,

[[Page 58923]]

and distributions are to be made in accordance with section 
401(a)(9)(B)(iii) (or, if applicable, section 401(a)(9)(B)(iv)), then 
the first payment, which must be made on or before the last day of the 
calendar year following the calendar year in which the employee died 
(or the date determined under Sec.  1.401(a)(9)-3(d), if applicable), 
must be the payment that is required for one payment interval. Payment 
intervals are the periods for which payments are received, for example, 
bimonthly, monthly, semi-annually, or annually. All benefit accruals as 
of the last day of the first distribution calendar year must be 
included in the calculation of the amount of annuity payments for 
payment intervals ending on or after the employee's required beginning 
date.
    (ii) Example. A defined benefit plan (Plan X) provides monthly 
annuity payments for the life of unmarried participants with a 10-year 
period certain. An unmarried, retired participant A in Plan X attains 
age 73 in 2025. A's monthly annuity payment under this single life 
annuity based on accruals through December 31, 2025, is $500. In order 
to meet the requirements of this paragraph (a)(3), the first monthly 
payment of $500 must be made on behalf of A on or before April 1, 2026, 
and monthly payments must continue to be made thereafter for the life 
of A (or over the 10-year period certain, if longer).
    (4) Single-sum distributions--(i) In general. In the case of a 
single-sum distribution of an employee's entire accrued benefit during 
a distribution calendar year, the portion of the distribution that is 
the required minimum distribution for the distribution calendar year 
(and thus not an eligible rollover distribution pursuant to section 
402(c)(4)(B)) is determined using the rule in either paragraph 
(a)(4)(ii) or (iii) of this section.
    (ii) Treatment as individual account. The portion of the single-sum 
distribution that is a required minimum distribution is determined by 
treating the single-sum-distribution as a distribution from an 
individual account plan and treating the amount of the single-sum 
distribution as the employee's account balance as of the end of the 
relevant valuation calendar year. If the single-sum distribution is 
being made in the calendar year that includes the required beginning 
date and the required minimum distribution for the employee's first 
distribution calendar year has not been distributed, the portion of the 
single-sum distribution that represents the required minimum 
distribution for the employee's first and second distribution calendar 
years is not eligible for rollover.
    (iii) Treatment as first annuity payment. The portion of the 
single-sum distribution that is a required minimum distribution is 
permitted to be determined by expressing the employee's benefit as an 
annuity that would satisfy this section with an annuity starting date 
that is the first day of the distribution calendar year for which the 
required minimum distribution is being determined, and treating one 
year of annuity payments as the required minimum distribution for that 
year (and therefore, not an eligible rollover distribution). If the 
single-sum distribution is being made in the calendar year that 
includes the required beginning date, and the required minimum 
distribution for the employee's first distribution calendar year has 
not been made, then the benefit must be expressed as an annuity with an 
annuity starting date that is the first day of the first distribution 
calendar year, and the payments for the first two distribution calendar 
years are treated as required minimum distributions (and therefore not 
eligible rollover distributions).
    (5) Death benefits. The rule in paragraph (a)(1) of this section 
prohibiting increasing payments under an annuity applies to payments 
made upon the death of an employee. However, the payment of an 
ancillary death benefit described in this paragraph (a)(5) may be 
disregarded in determining whether annuity payments are increasing, and 
it can be excluded in determining an employee's entire interest. A 
death benefit with respect to an employee's benefit is an ancillary 
death benefit for purposes of this paragraph (a) if--
    (i) It is not paid as part of the employee's accrued benefit or 
under any optional form of the employee's benefit; and
    (ii) The death benefit, together with any other potential payments 
with respect to the employee's benefit that may be provided to a 
survivor, satisfies the incidental benefit requirement of Sec.  1.401-
1(b)(1)(i).
    (6) Separate treatment of separate identifiable components. If an 
employee's benefit under a defined benefit plan or annuity contract 
consists of separate identifiable components that are subject to 
different distribution elections, then the rules of this section may be 
applied separately to each of those components.
    (7) Additional guidance. Additional guidance regarding how 
distributions under a defined benefit plan must be paid in order to 
satisfy section 401(a)(9) may be issued by the Commissioner in revenue 
rulings, notices, or other guidance published in the Internal Revenue 
Bulletin. See Sec.  601.601(d) of this chapter.
    (b) Application of incidental benefit requirement--(1) Life annuity 
for employee. If the employee's benefit is paid in the form of a life 
annuity for the life of the employee satisfying section 401(a)(9) 
without regard to the minimum distribution incidental benefit 
requirement under section 401(a)(9)(G) (MDIB requirement), then the 
MDIB requirement will be satisfied.
    (2) Joint and survivor annuity--(i) Determination of designated 
beneficiary. If the employee's benefit is paid in the form of a life 
annuity for the lives of the employee and a designated beneficiary, 
then the designated beneficiary is determined as of the annuity 
starting date.
    (ii) Spouse beneficiary. If the employee's sole beneficiary is the 
employee's spouse and the distributions satisfy section 401(a)(9) 
without regard to the MDIB requirement, the distributions to the 
employee will be deemed to satisfy the MDIB requirement. For example, 
if an employee's benefit is being distributed in the form of a joint 
and survivor annuity for the lives of the employee and the employee's 
spouse and the spouse is the sole beneficiary of the employee, the 
amount of the periodic payment payable to the spouse would not violate 
the MDIB requirement if it were 100 percent of the annuity payment 
payable to the employee, regardless of the difference in the ages 
between the employee and the employee's spouse.
    (iii) Joint and survivor annuity, non-spouse beneficiary. If 
distributions commence in the form of a joint and survivor annuity for 
the lives of the employee and a beneficiary other than the employee's 
spouse, and the employee is the applicable age or older on the 
employee's birthday in the calendar year that includes the annuity 
starting date, then the MDIB requirement will not be satisfied as of 
the date distributions commence unless, under the distribution option, 
the annuity payments satisfy the conditions of this paragraph 
(b)(2)(iii). The periodic annuity payments to the survivor satisfy this 
paragraph (b)(2)(iii) only if, at any time on or after the employee's 
required beginning date, those payments do not exceed the applicable 
percentage of the periodic annuity payment payable to the employee 
using the table in this paragraph (b)(2)(iii). The applicable 
percentage is based on the employee/

[[Page 58924]]

beneficiary age difference, which is equal to the excess of the age of 
the employee over the age of the beneficiary based on their ages on 
their birthdays in the calendar year that includes the annuity starting 
date. In the case of an annuity that provides for increasing payments, 
the requirement of this paragraph (b)(2)(iii) will not be violated 
merely because benefit payments to the beneficiary increase, provided 
the increase is determined in the same manner for the employee and the 
beneficiary. See paragraph (k)(2) of this section for rules regarding 
the application of the MDIB requirement in the case of annuity payments 
with an annuity starting date that is before the calendar year in which 
an employee attains the applicable age.

                    Table 1 to Paragraph (b)(2)(iii)
------------------------------------------------------------------------
                                                              Applicable
            Employee/beneficiary age difference               percentage
------------------------------------------------------------------------
10 years or less...........................................          100
11.........................................................           96
12.........................................................           93
13.........................................................           90
14.........................................................           87
15.........................................................           84
16.........................................................           82
17.........................................................           79
18.........................................................           77
19.........................................................           75
20.........................................................           73
21.........................................................           72
22.........................................................           70
23.........................................................           68
24.........................................................           67
25.........................................................           66
26.........................................................           64
27.........................................................           63
28.........................................................           62
29.........................................................           61
30.........................................................           60
31.........................................................           59
32.........................................................           59
33.........................................................           58
34.........................................................           57
35.........................................................           56
36.........................................................           56
37.........................................................           55
38.........................................................           55
39.........................................................           54
40.........................................................           54
41.........................................................           53
42.........................................................           53
43.........................................................           53
44 and greater.............................................           52
------------------------------------------------------------------------

    (3) Period certain and annuity features. If a distribution form 
includes a period certain, the amount of the annuity payments payable 
to the beneficiary need not be reduced during the period certain, but 
in the case of a joint and survivor annuity with a period certain, the 
amount of the annuity payments payable to the beneficiary must satisfy 
paragraph (b)(2)(iii) of this section after the expiration of the 
period certain.
    (4) Deemed satisfaction of incidental benefit rule. Except in the 
case of distributions with respect to an employee's benefit that 
include an ancillary death benefit described in paragraph (a)(5) of 
this section, to the extent the incidental benefit requirement of Sec.  
1.401-1(b)(1)(i) requires a distribution, that requirement is deemed to 
be satisfied if distributions satisfy the MDIB requirement of this 
paragraph (b). If the employee's benefits include an ancillary death 
benefit described in paragraph (a)(5) of this section, the benefits 
(including the ancillary death benefit) must be distributed in 
accordance with the incidental benefit requirement described in Sec.  
1.401-1(b)(1)(i) and the benefits (excluding the ancillary death 
benefit) must also satisfy the MDIB requirement of this paragraph (b).
    (c) Period certain annuity--(1) Distributions commencing during the 
employee's life. If the employee is the applicable age or older on the 
employee's birthday in the calendar year that includes the annuity 
starting date, then the period certain is not permitted to exceed the 
applicable denominator for the calendar year that includes the annuity 
starting date that would apply pursuant to Sec.  1.401(a)(9)-5(c) if 
the plan were a defined contribution plan. However, that applicable 
denominator is determined taking into account the rules of Sec.  
1.401(a)(9)-5(c)(2) (relating to a spouse who is more than 10 years 
younger than the employee) only if the period certain is not provided 
in conjunction with a life annuity under paragraph (a)(2) of this 
section. See paragraph (k) of this section for the rule for annuity 
payments with an annuity starting date that is before the calendar year 
in which the employee attains the applicable age.
    (2) Distributions commencing after the employee's death. If the 
employee dies before the required beginning date and annuity 
distributions commence after the death of the employee under the life 
expectancy rule (under section 401(a)(9)(B)(iii) or (iv)), the period 
certain for any distributions commencing after death may not exceed the 
applicable denominator that would apply pursuant to Sec.  1.401(a)(9)-
5(d)(2) for the calendar year that includes the annuity starting date 
if the plan were a defined contribution plan.
    (d) Use of annuity contract--(1) In general. A plan will not fail 
to satisfy section 401(a)(9) merely because distributions are made from 
an annuity contract purchased from an insurance company that is 
licensed to do business under the laws of the State in which the 
contract is sold, provided that the payments satisfy the requirements 
of this section. Except in the case of a qualifying longevity annuity 
contract (QLAC) described in paragraph (q) of this section, if the 
annuity contract is purchased after the required beginning date, then 
the first payment interval must begin on or before the purchase date 
and the payment that is made at the end of that payment interval is the 
amount required for one payment interval. If the payments actually made 
under the annuity contract do not meet the requirements of this 
section, the plan fails to satisfy section 401(a)(9). See also 
paragraph (o) of this section permitting certain increases under 
annuity contracts.
    (2) Applicability of section 401(a)(9)(H)--(i) Annuity contract 
subject to section 401(a)(9)(H). If an annuity contract is purchased 
under a defined contribution plan, or the annuity contract is otherwise 
subject to section 401(a)(9)(H), payments under that annuity contract 
cannot extend past the calendar year described in Sec.  1.401(a)(9)-
5(e).
    (ii) Determination of an eligible designated beneficiary. If an 
annuity contract is described in paragraph (d)(2)(i) of this section, 
then the determination of whether a beneficiary is an eligible 
designated beneficiary under section 401(a)(9)(E)(ii), is made as of 
the annuity starting date. For example, if, as of the annuity starting 
date, the employee's beneficiary under the contract is the employee's 
spouse, then the spouse is treated as an eligible designated 
beneficiary for purposes of applying the rules of section 401(a)(9)(H) 
even if the employee and spouse are subsequently divorced.
    (e) Treatment of additional accruals--(1) General rule. If 
additional benefits accrue in a calendar year after the employee's 
first distribution calendar year, distribution of the amount that 
accrues in that later calendar year must commence in accordance with 
paragraph (a) of this section beginning with the first payment interval 
ending in the calendar year following the calendar year in which that 
amount accrues.
    (2) Administrative delay. A plan will not fail to satisfy this 
section merely because there is an administrative delay in the 
commencement of the distribution of the additional benefits accrued in 
a calendar year, provided that--
    (i) The payment commences no later than the end of the first 
calendar year following the calendar year in which the additional 
benefit accrues; and

[[Page 58925]]

    (ii) The total amount paid during that first calendar year with 
respect to those additional benefits is no less than the total amount 
that was required to be paid during that year under paragraph (e)(1) of 
this section.
    (f) Treatment of nonvested benefits. In the case of annuity 
distributions under a defined benefit plan, if any portion of the 
employee's benefit is not vested as of December 31 of a distribution 
calendar year, the portion that is not vested as of that date is 
treated as not having accrued for purposes of determining the required 
minimum distribution for that distribution calendar year. When an 
additional portion of the employee's benefit becomes vested, that 
portion will be treated as an additional accrual. See paragraph (e) of 
this section for the rules for distributing benefits that accrue under 
a defined benefit plan after the employee's first distribution calendar 
year.
    (g) Requirement for actuarial increase--(1) General rule--(i) 
Applicability of increase. Except as otherwise provided in this 
paragraph (g), if an employee retires after the calendar year in which 
the employee attains age 70\1/2\, then, in order to satisfy section 
401(a)(9)(C)(iii), the employee's accrued benefit under a defined 
benefit plan must be actuarially increased for the period (if any) from 
the start date described in paragraph (g)(1)(ii) of this section to the 
end date described in paragraph (g)(1)(iii) of this section.
    (ii) Start date for actuarial increase. The start date for the 
required actuarial increase is April 1 following the calendar year in 
which the employee attains age 70\1/2\ (or January 1, 1997, if the 
employee attained 70\1/2\ prior to January 1, 1997).
    (iii) End date for actuarial increase. The end date for the 
required actuarial increase is the date on which benefits commence 
after retirement in a form that satisfies paragraphs (a) and (h) of 
this section.
    (iv) Determination of when employee attains age 70\1/2\. An 
employee attains age 70\1/2\ as of the date six calendar months after 
the 70th anniversary of the employee's birth. For example, if the date 
of birth of an employee is June 30, 1955, the 70th anniversary of the 
employee's birth is June 30, 2025, and the employee attains age 70\1/2\ 
in 2025. However, if the employee's date of birth is July 1, 1955, the 
70th anniversary of the employee's birth is July 1, 2025, and the 
employee attains age 70\1/2\ in 2026.
    (2) Nonapplication to 5-percent owners. This paragraph (g) does not 
apply to an employee if that employee is a 5-percent owner (as defined 
in section 416) with respect to the plan year ending in the calendar 
year in which the employee attains the applicable age.
    (3) Nonapplication to governmental plans. The actuarial increase 
required under this paragraph (g) does not apply to a governmental plan 
(within the meaning of section 414(d)).
    (4) Nonapplication to church plans and church employees--(i) Church 
plans. The actuarial increase required under this paragraph (g) does 
not apply to a church plan. For purposes of this paragraph (g)(4)--
    (A) The term church plan means a plan maintained by a church (as 
defined in section 3121(w)(3)(A)) or a qualified church-controlled 
organization (as defined in section 3121(w)(3)(B)) for its employees; 
and
    (B) A plan is treated as a church plan only if at least 85 percent 
of the individuals covered by the plan are employees of a church or a 
qualified church-controlled organization.
    (ii) Determination of whether an individual is an employee of a 
church. For purposes of this paragraph (g)(4), the determination of 
whether an individual is an employee of a church or a qualified church-
controlled organization is made in accordance with the rules of section 
414(e)(3)(B) other than section 414(e)(3)(B)(ii).
    (iii) Church employees covered in other plans. If a plan is not a 
church plan within the meaning of paragraph (g)(4)(i) of this section, 
then the actuarial increase required under this paragraph (g) does not 
apply to benefits accrued under the plan by an individual that are 
attributable to the service the individual performs as an employee of a 
church or a qualified church-controlled organization (including service 
performed as an employee described in section 414(e)(3)(B)(i)).
    (h) Amount of actuarial increase--(1) In general. In order to 
satisfy section 401(a)(9)(C)(iii), the retirement benefits payable with 
respect to an employee as of the end of the period for which actuarial 
increases must be provided as described in paragraph (g) of this 
section must be no less than--
    (i) The actuarial equivalent of the employee's retirement benefits 
that would have been payable as of the start date described in 
paragraph (g)(1)(ii) of this section if benefits had commenced on that 
date; plus
    (ii) The actuarial equivalent of any additional benefits accrued 
after that date; reduced by
    (iii) The actuarial equivalent of any distributions made with 
respect to the employee's retirement benefits after that date.
    (2) Actuarial equivalence basis. For purposes of this paragraph 
(h), actuarial equivalence is determined using reasonable actuarial 
assumptions. If the plan is subject to section 411, the plan's 
assumptions must be the same as the assumptions used for determining 
actuarial equivalence for purposes of satisfying section 411.
    (3) Coordination with section 411 actuarial increase. Under section 
411, in order for an employee's accrued benefit under a defined benefit 
plan to be nonforfeitable, the plan must make an actuarial adjustment 
to any portion of that accrued benefit, the payment of which is 
deferred past normal retirement age. The only exception to this rule is 
that, generally, no actuarial adjustment is required to reflect the 
period during which a benefit is suspended as permitted under section 
411(a)(3)(B). The actuarial increase required under section 
401(a)(9)(C)(iii) for the period (if any) described in paragraph 
(g)(1)(i) of this section generally is the same as, and not in addition 
to, the actuarial increase required for the same period under section 
411 to reflect any delay in the payment of retirement benefits after 
normal retirement age. However, unlike the actuarial increase required 
under section 411, the actuarial increase required under section 
401(a)(9)(C)(iii) must be provided even during any period during which 
an employee's benefit has been suspended in accordance with section 
411(a)(3)(B).
    (i) [Reserved]
    (j) Distributions restricted pursuant to section 436--(1) General 
rule. If an employee's entire interest is being distributed in 
accordance with the 5-year rule of section 401(a)(9)(B)(ii), a plan is 
not treated as failing to satisfy section 401(a)(9) merely because of 
the application of a payment restriction under section 436(d), provided 
that distributions of the employee's interest commence by the end of 
the calendar year that includes the fifth anniversary of the date of 
the employee's death and, after the annuity starting date, those 
distributions are paid in a form that is as accelerated as permitted 
under section 436(d), as described in paragraph (j)(2) or (3) of this 
section.
    (2) Payments restricted under section 436(d)(3). If the payment 
restriction of section 436(d)(3) applies at the time benefits commence 
under paragraph (j)(1) of this section, then distributions are made in 
a form that is as accelerated as permitted under section 436(d) if the 
benefits are paid in a single-sum payment equal to the maximum amount 
allowed under section 436(d)(3), with the remainder paid as a life 
annuity to

[[Page 58926]]

the beneficiary (or over the course of 240 months pursuant to Sec.  
1.436-1(j)(6)(ii) in the case of a beneficiary that is not an 
individual), subject to a requirement that the benefit remaining is 
commuted to a single-sum payment when the section 436(d)(3) payment 
restriction ceases to apply (to the extent that a single-sum payment is 
permitted under section 436(d)(1) and (2)).
    (3) Payments restricted under section 436(d)(1) or (2). If a plan 
is subject to the payment restriction in section 436(d)(1) or (2) at 
the time benefits commence under paragraph (j)(1) of this section, then 
distributions are made in a form that is as accelerated as permitted 
under section 436(d) if the benefits are paid in the form of a life 
annuity to the beneficiary (or over the course of 240 months pursuant 
to Sec.  1.436-1(j)(6)(ii), in the case of a beneficiary that is not an 
individual), subject to a requirement that the benefit remaining is 
commuted to a single-sum payment to the extent permitted under section 
436(d) (for example, the maximum amount allowed under section 
436(d)(3)) when the payment restriction under section 436(d)(1) or (2) 
ceases to apply.
    (k) Treatment of early commencement--(1) General rule. Generally, 
the determination of whether a stream of payments satisfies the 
requirements of this section is made as of the required beginning date. 
However, if distributions start prior to the required beginning date in 
a distribution form that is an annuity under which distributions are 
made in accordance with the provisions of paragraph (a) of this section 
and are made over a period permitted under section 401(a)(9)(A)(ii), 
then, except as provided in this paragraph (k), the annuity starting 
date will be treated as the required beginning date for purposes of 
applying the rules of this section and Sec.  1.401(a)(9)-2. Thus, for 
example, the determination of the designated beneficiary and the amount 
of distributions will be made as of the annuity starting date. 
Similarly, if the employee dies after the annuity starting date but 
before the required beginning date determined under Sec.  1.401(a)(9)-
2(b), then after the employee's death--
    (i) The remaining portion of the employee's interest must continue 
to be distributed in accordance with this section over the remaining 
period over which distributions commenced; and
    (ii) The rules in Sec.  1.401(a)(9)-3 relating to death before the 
required beginning date do not apply.
    (2) Joint and survivor annuity, non-spouse beneficiary--(i) 
Application of MDIB requirement. If distributions commence in the form 
of a joint and survivor annuity for the lives of the employee and a 
beneficiary other than the employee's spouse, and as of the employee's 
birthday in the calendar year that includes the annuity starting date, 
the employee is younger than the applicable age, then the MDIB 
requirement will not be satisfied as of the date distributions commence 
unless, under the distribution option, the annuity payments to be made 
on and after the employee's required beginning date satisfy the 
conditions of this paragraph (k)(2). The periodic annuity payments 
payable to the survivor satisfy this paragraph (k)(2) if, at all times 
on and after the employee's annuity starting date, those payments do 
not exceed the applicable percentage of the periodic annuity payment 
payable to the employee determined using the table in paragraph 
(b)(2)(iii) of this section (but based on the adjusted employee/
beneficiary age difference). The adjusted employee/beneficiary age 
difference is determined by first calculating the employee/beneficiary 
age difference under paragraph (b)(2)(iii) of this section and then 
reducing that age difference by the number of years by which the 
employee is younger than the applicable age on the employee's birthday 
in the calendar year that includes the annuity starting date. In the 
case of an annuity that provides for increasing payments, the 
requirement of this paragraph (k)(2) will not fail to be satisfied 
merely because benefit payments to the beneficiary increase, provided 
the increase is determined in the same manner for the employee and the 
beneficiary.
    (ii) Example--(A) Facts. Distributions under a defined benefit plan 
commence on January 1, 2025, to an employee Z, born March 1, 1958. Z's 
daughter Y, born February 5, 1989, is Z's beneficiary. The 
distributions are in the form of a joint and survivor annuity for the 
lives of Z and Y with payments of $500 a month to Z and upon Z's death 
of $500 a month to Y (so that the monthly payment to Y is 100 percent 
of the monthly amount payable to Z).
    (B) Analysis and conclusion. Z's required beginning date is April 
1, 2032 (that is, April 1 of the calendar year following the calendar 
year in which Z will attain age 73). Under paragraph (k)(1) of this 
section, because distributions commence prior to Z's required beginning 
date and are in the form of a joint and survivor annuity for the lives 
of Z and Y, compliance with the rules of this section is determined as 
of the annuity starting date. Under this paragraph (k)(2), the adjusted 
employee/beneficiary age difference is calculated by taking the excess 
of the employee's age over the beneficiary's age and subtracting the 
number of years the employee is younger than the applicable age (in 
this case, age 73). In 2025, Z attains age 67 and Y attains age 36. 
Accordingly, the employee/beneficiary age difference is 31. Because Z 
is commencing benefits 6 years before attaining the applicable age, the 
adjusted employee/beneficiary age difference is 25 years. Under table 1 
to paragraph (b)(2)(iii) of this section, the applicable percentage for 
a 25-year adjusted employee/beneficiary age difference is 66 percent. 
The plan does not satisfy the MDIB requirement because, as of January 
1, 2025 (the annuity starting date), the distribution option provides 
that, as of Z's required beginning date, the monthly payment to Y upon 
Z's death will exceed 66 percent of Z's monthly payment.
    (3) Limitation on period certain. If, as of the employee's birthday 
in the calendar year that includes the annuity starting date, the 
employee is younger than the applicable age, then the period certain 
may not exceed the limitation on the period certain for an individual 
who has attained the applicable age as specified in paragraph (c)(1) of 
this section, increased by the number of years by which the employee is 
younger than the applicable age on that birthday.
    (l) Early commencement for surviving spouse. Generally, the 
determination of whether a stream of payments satisfies the 
requirements of this section is made as of the date on which 
distributions are required to commence. However, if the employee dies 
prior to the required beginning date, distributions commence to the 
surviving spouse of an employee over a period permitted under section 
401(a)(9)(B)(iii)(II) prior to the date on which distributions are 
required to commence, and the distribution form is an annuity under 
which distributions are made in accordance with the provisions of 
paragraph (a) of this section, then the annuity starting date will be 
considered the required beginning date for purposes of section 
401(a)(9)(B)(iv)(III). Thus, if the surviving spouse dies after 
commencing benefits and before the date described in 
401(a)(9)(B)(iv)(II), then after the surviving spouse's death--
    (1) The rules in Sec.  1.401(a)(9)-3(e)(1) relating to the death of 
the surviving spouse before the required beginning date under section 
401(a)(9)(B)(iv)(III) will not apply upon the death of the surviving 
spouse; and
    (2) The annuity distributions must continue to be made in 
accordance with paragraph (a) of this section over the remaining period 
over which distributions commenced.

[[Page 58927]]

    (m) Determination of entire interest under annuity contract--(1) 
General rule. Prior to the date that an annuity contract under an 
individual account plan is annuitized, the interest of an employee or 
beneficiary under that contract is treated as an individual account for 
purposes of section 401(a)(9). Thus, the required minimum distribution 
for any year with respect to that interest is determined under Sec.  
1.401(a)(9)-5 rather than this section. See Sec.  1.401(a)(9)-5(a)(5) 
for rules relating to the satisfaction of section 401(a)(9) in the year 
that annuity payments commence (including situations in which an 
annuity contract is purchased with a portion of an employee's account 
balance) and Sec.  1.401(a)(9)-5(b)(4) for rules relating to QLACs (as 
defined in paragraph (q) of this section).
    (2) Entire interest. For purposes of applying the rules in Sec.  
1.401(a)(9)-5, the entire interest under the annuity contract as of 
December 31 of the relevant valuation calendar year is treated as the 
account balance for the valuation calendar year described in Sec.  
1.401(a)(9)-5(c). The entire interest under an annuity contract is the 
dollar amount credited to the employee or beneficiary under the 
contract (that is, the notional account balance) plus the actuarial 
present value of any additional benefits (for example, survivor 
benefits in excess of the dollar amount credited to the employee or 
beneficiary) that will be provided under the contract. However, 
paragraph (m)(3) of this section describes certain additional benefits 
that may be disregarded in determining the employee's entire interest 
under the annuity contract. The actuarial present value of any 
additional benefits described under this paragraph (m) is to be 
determined using reasonable actuarial assumptions, including reasonable 
assumptions as to future distributions, and without regard to an 
individual's health.
    (3) Exclusions--(i) Additional value does not exceed 20 percent. 
The actuarial present value of any additional benefits provided under 
an annuity contract described in paragraph (m)(2) of this section may 
be disregarded if the sum of the dollar amount credited to the employee 
or beneficiary under the contract and the actuarial present value of 
the additional benefits is no more than 120 percent of the dollar 
amount credited to the employee or beneficiary under the contract and 
the additional benefits are one or both of the following--
    (A) Additional benefits that, in the case of a distribution, are 
reduced by an amount sufficient to ensure that the ratio of the sum to 
the dollar amount credited does not increase as a result of the 
distribution; and
    (B) An additional benefit that is the right to receive a final 
payment upon death that does not exceed the amount by which the total 
consideration paid exceeds the amount of prior distributions.
    (ii) Return of premium death benefit. If the only additional 
benefit provided under the contract is the additional benefit described 
in paragraph (m)(3)(i)(B) of this section, the additional benefit may 
be disregarded regardless of its value in relation to the dollar amount 
credited to the employee or beneficiary under the contract.
    (iii) Additional guidance. The Commissioner, in revenue rulings, 
notices, or other guidance published in the Internal Revenue Bulletin 
(see Sec.  601.601(d) of this chapter), may provide additional guidance 
on additional benefits that may be disregarded.
    (4) Examples. The examples in this paragraph (m)(4), which use a 5 
percent interest rate and the mortality table used for distributions 
subject to section 417(e)(3) provided in Notice 2019-67, 2019-52 IRB 
1510, illustrate the application of the rules in this paragraph (m):
    (i) Example 1--(A) Facts. G is the owner of a variable annuity 
contract (Contract S) under an individual account plan that has not 
been annuitized. Contract S provides a death benefit until the end of 
the calendar year in which the owner attains the age of 84 equal to the 
greater of the current Contract S notional account balance (dollar 
amount credited to G under the contract) and the largest notional 
account balance at any previous policy anniversary reduced 
proportionally for subsequent partial distributions (High Water Mark). 
Contract S provides a death benefit in calendar years after the 
calendar year in which the owner attains age 84 equal to the current 
notional account balance. Contract S provides that assets within the 
contract may be invested in a Fixed Account at a guaranteed rate of 2 
percent. Contract S provides no other additional benefits.
    (B) Actuarial calculations. At the end of 2028, when G has an 
attained age of 78 and 9 months, the notional account balance of 
Contract S (after the distribution for 2028 of 4.55 percent of the 
notional account balance as of December 31, 2027) is $550,000, and the 
High Water Mark, before adjustment for any withdrawals from Contract S 
in 2028, is $1,000,000. Thus, Contract S will provide additional 
benefits (that is, the death benefits in excess of the notional account 
balance) through 2034, the year S turns 84. The actuarial present value 
of these additional benefits at the end of 2028 is determined to be 
$67,978 (12 percent of the notional account balance). In making this 
determination, the following assumptions are made: on average, deaths 
occur mid-year; the investment return on G's notional account balance 
is 2 percent per annum; and minimum required distributions (determined 
without regard to additional benefits under the Contract S) are made at 
the end of each year. The following two tables summarize the actuarial 
methodology used in determining the actuarial present value of the 
additional benefit.

                                        Table 2 to Paragraph (m)(4)(i)(B)
----------------------------------------------------------------------------------------------------------------
                                                       End-of-year      Average                    End-of-year
                                          Death     notional account    notional    Withdrawal  notional account
                 Year                    benefit     balance before     account     at end of     balance after
                                       during year     withdrawal       balance        year        withdrawal
----------------------------------------------------------------------------------------------------------------
2028.................................   $1,000,000  ................  ...........  ...........          $550,000
2029.................................  \1\ 954,545      \2\ $561,000          \3\  \4\ $26,606           534,934
                                                                         $555,500
2030.................................      909,306           545,633      540,283       26,482           519,151
2031.................................      864,291           529,534      524,342       26,760           502,774
2032.................................      819,740           512,829      507,801       27,177           485,652
2033.................................      775,430           495,365      490,509       27,438           467,927
2034.................................      731,620           477,286      472,606       27,853           449,433
----------------------------------------------------------------------------------------------------------------
\1\ $1,000,000 death benefit reduced 4.55 percent for withdrawal during 2028.

[[Page 58928]]

 
\2\ Notional account balance at end of preceding year (after distribution) increased by 2 percent return for
  year.
\3\ Average of $550,000 notional account balance at end of preceding year (after distribution) and $561,000
  notional account balance at end of current year (before distribution).
\4\ December 31, 2028 notional account balance (before distribution) divided by uniform lifetime table age 79
  factor of 21.1.


                                        Table 3 to Paragraph (m)(4)(i)(B)
----------------------------------------------------------------------------------------------------------------
                                                                                                    Discounted
                                                   Survivorship      Interest     Mortality rate    additional
                      Year                          to start of     discount to     during year      benefits
                                                       year         end of 2028                     within year
----------------------------------------------------------------------------------------------------------------
2028............................................  ..............  ..............  ..............  ..............
2029............................................         1.00000          .97590       \5\.03321          12,933
2030............................................          .96679       \6\.92943          .03739      \7\ 12,398
2031............................................       \8\.93064          .88517          .04198          11,756
2032............................................          .89157          .84302          .04715          11,055
2033............................................          .84953          .80288          .05305          10,310
2034............................................          .80446          .76464          .05979           9,526
                                                 ---------------------------------------------------------------
                                                  ..............  ..............  ..............         $67,978
----------------------------------------------------------------------------------------------------------------
\5\ One-quarter age 78 rate plus three-quarters age 79 rate.
\6\ Five percent discounted 18 months (1.05(-1.5)).
\7\ Blended age 79/age 80 mortality rate (.03739) multiplied by the $369,023 excess of death benefit over the
  average notional account balance ($909,306 less $540,283) multiplied by .96679 probability of survivorship to
  the start of 2030 multiplied by 18-month interest discount of .92943.
\8\ Survivorship to start of preceding year (.96679) multiplied by probability of survivorship during prior year
  (1-.03739).

    (C) Conclusion. Because Contract S provides that, in the case of a 
distribution, the value of the additional death benefit (which is the 
only additional benefit available under the contract) is reduced by an 
amount that is at least proportional to the reduction in the notional 
account balance and, at age 78 and 9 months, the sum of the notional 
account balance (dollar amount credited to the employee under the 
contract) and the actuarial present value of the additional death 
benefit is no more than 120 percent of the notional account balance, 
the exclusion under paragraph (m)(3)(i) of this section applies for 
2029. Therefore, for purposes of applying the rules in Sec.  
1.401(a)(9)-5, the entire interest under Contract S may be determined 
as the notional account balance (that is, without regard to the 
additional death benefit).
    (ii) Example 2--(A) Facts. The facts are the same as in paragraph 
(m)(4)(i) of this section (Example 1), except that the notional account 
balance is $550,000 at the end of 2028. In this instance, the actuarial 
present value of the death benefit in excess of the notional account 
balance in 2028 is determined to be $97,273 (24 percent of the notional 
account balance). The following two tables summarize the actuarial 
methodology used in determining the actuarial present value of the 
additional benefit.

                                       Table 4 to Paragraph (m)(4)(ii)(A)
----------------------------------------------------------------------------------------------------------------
                                                       End-of-year      Average                    End-of-year
                                          Death     notional account    notional    Withdrawal  notional account
                 Year                    benefit     balance before     account     at end of     balance after
                                       during year     withdrawal       balance        year        withdrawal
----------------------------------------------------------------------------------------------------------------
2028.................................   $1,000,000  ................  ...........  ...........          $400,000
2029.................................      954,545          $408,000     $404,000      $18,957           389,043
2030.................................      909,306           396,824      392,933       19,260           377,564
2031.................................      864,291           385,115      381,339       19,462           365,653
2032.................................      819,740           372,966      369,310       19,765           353,201
2033.................................      775,430           360,265      356,733       19,955           340,310
2034.................................      731,620           347,116      343,713       20,257           326,859
----------------------------------------------------------------------------------------------------------------


                                       Table 5 to Paragraph (m)(4)(ii)(A)
----------------------------------------------------------------------------------------------------------------
                                                                                                    Discounted
                                                   Survivorship      Interest     Mortality rate    additional
                      Year                          to start of     discount to     during year      benefits
                                                       year         end of 2028                     within year
----------------------------------------------------------------------------------------------------------------
2028............................................  ..............  ..............  ..............  ..............
2029............................................         1.00000          .97590          .03321         $17,843
2030............................................          .96679          .92943          .03739          17,349
2031............................................          .93064          .88517          .04198          16,701
2032............................................          .89157          .84302          .04715          15,963
2033............................................          .84953          .80288          .05305          15,150
2034............................................          .80446          .76464          .05979          14,267
                                                 ---------------------------------------------------------------
                                                  ..............  ..............  ..............         $97,273
----------------------------------------------------------------------------------------------------------------


[[Page 58929]]

    (B) Conclusion. Because the sum of the notional account balance and 
the actuarial present value of the additional death benefit is more 
than 120 percent of the notional account balance, the exclusion under 
paragraph (m)(3)(i) of this section does not apply for 2029. Therefore, 
for purposes of applying the rules in Sec.  1.401(a)(9)-5, the entire 
interest under Contract S must include the actuarial present value of 
the additional death benefit.
    (n) Change in annuity payment period--(1) In general. An annuity 
payment period may be changed in accordance with the reannuitization 
provisions set forth in paragraph (n)(2) of this section or in 
association with an annuity payment increase described in paragraph (o) 
of this section.
    (2) Reannuitization. If, in a stream of annuity payments that 
otherwise satisfies section 401(a)(9), the annuity payment period is 
changed and the annuity payments are modified in association with that 
change, this modification will not cause the distributions to fail to 
satisfy section 401(a)(9) provided the conditions set forth in 
paragraph (n)(3) of this section are satisfied, and--
    (i) The modification occurs at the time that the employee retires 
or in connection with a plan termination;
    (ii) The annuity payments prior to modification are annuity 
payments paid over a period certain without life contingencies; or
    (iii) The annuity payments after modification are paid under a 
qualified joint and survivor annuity over the joint lives of the 
employee and a designated beneficiary, the employee's spouse is the 
sole beneficiary, and the modification occurs in connection with the 
employee becoming married to that spouse.
    (3) Conditions. In order to modify a stream of annuity payments in 
accordance with paragraph (n)(2) of this section, the following 
conditions must be satisfied--
    (i) The future payments under the modified stream satisfy section 
401(a)(9) and this section (determined by treating the date of the 
change as a new annuity starting date and the actuarial present value 
of the remaining payments prior to modification as the entire interest 
of the participant);
    (ii) For purposes of sections 415 and 417, the modification is 
treated as a new annuity starting date;
    (iii) After taking into account the modification, the annuity 
stream satisfies section 415 (determined at the original annuity 
starting date, using the interest rates and mortality tables applicable 
as of that date); and
    (iv) The end point of the period certain, if any, for any modified 
payment period is not later than the end point available under section 
401(a)(9) to the employee at the original annuity starting date.
    (4) Examples. For the purposes of the examples in this paragraph 
(n)(4), assume that the applicable segment rates under section 
417(e)(3) are 5.00 percent, 5.50 percent, and 6.00 percent, and the 
applicable mortality table under section 417(e)(3) is the mortality 
table provided in Notice 2023-73, 2023-45 IRB 232. In addition, assume 
that the section 415 limit at age 72 for a straight life annuity is 
$306,667 (which is the lesser of the annual benefit under section 
415(b)(1)(A), as adjusted pursuant to section 415(d) and further 
adjusted for age 72 in accordance with Sec.  1.415(b)-1(e)(1)(i), and 
100 percent of the participant's average compensation for the 
participant's high 3 years):
    (i) Example 1--(A) Facts--(1) Background. Participant D has 10 
years of participation in a frozen defined benefit plan (Plan W). D is 
not retired and elects to receive distributions from Plan W in the form 
of a straight life annuity with annual payments of $310,000 per year 
beginning in 2025 at a date when D has an attained age of 72. Plan W 
offers non-retired employees in pay status the opportunity to modify 
their annuity payments due to an associated change in the payment 
period at retirement. Plan W treats the date of the change in payment 
period as a new annuity starting date for purposes of sections 415 and 
417. Thus, for example, the plan provides a new qualified and joint 
survivor annuity election and obtains spousal consent. Plan W 
determines modifications of annuity payment amounts at retirement so 
that the present value of future new annuity payment amounts (taking 
into account the new associated payment period) is actuarially 
equivalent to the present value of future pre-modification annuity 
payments (taking into account the pre-modification annuity payment 
period). Actuarial equivalency for this purpose is determined using the 
applicable segment rates under section 417(e)(3)(C) and the applicable 
mortality table as of the date of modification.
    (2) Payment of retirement benefits to Participant D. D retires in 
2029 at the age of 76 and, after receiving four annual payments of 
$310,000, elects to receive the remaining distributions from Plan W in 
the form of an immediate final lump sum payment of $2,795,732. Because 
payment of retirement benefits in the form of an immediate final lump 
sum payment satisfies (in terms of form) section 401(a)(9), the 
condition under paragraph (n)(3)(i) of this section is met.
    (B) Analysis. Because Plan W treats a modification of an annuity 
payment stream at retirement as a new annuity starting date for 
purposes of sections 415 and 417, the condition under paragraph 
(n)(3)(ii) of this section is met. After taking into account the 
modification, the annuity stream determined as of the original annuity 
starting date consists of annual payments beginning at age 72 of 
$310,000, $310,000, $310,000, $310,000, and $2,795,732. This benefit 
stream is actuarially equivalent to a straight life annuity at age 72 
of $315,145, calculated in accordance with section 415(b)(2)(E)(ii), 
which is an amount less than the section 415 limit determined at the 
original annuity starting date. Thus, the condition under paragraph 
(n)(3)(iii) of this section is met. In addition, because the modified 
payment period does not include a period certain, paragraph (n)(3)(iv) 
of this section does not apply.
    (C) Conclusion. Because a stream of annuity payments in the form of 
a straight life annuity satisfies section 401(a)(9), and because each 
of the conditions under paragraph (n)(3) of this section are satisfied, 
the modification of annuity payments to D described in this example 
meets the requirements of this paragraph (n).
    (ii) Example 2--(A) Facts. The facts are the same as in paragraph 
(n)(4)(i) of this section (Example 1), except that the straight life 
annuity payments are paid at a rate of $330,000 per year and, after D 
retires, the lump sum payment at age 76 is $2,976,102. Thus, after 
taking into account the modification, the annuity stream determined as 
of the original annuity starting date consists of annual payments 
beginning at age 72 of $330,000, $330,000, $330,000, $330,000, and 
$2,976,102.
    (B) Conclusion. The benefit stream described in paragraph 
(n)(4)(ii)(A) of this section is actuarially equivalent to a straight 
life annuity at age 72 of $335,477, calculated in accordance with 
section 415(b)(2)(E)(ii), which exceeds the section 415 limit 
determined at the original annuity starting date. Thus, the lump sum 
payment to D fails to satisfy the condition under paragraph (n)(3)(iii) 
of this section. Therefore, the lump sum payment to D fails to meet the 
requirements of this paragraph (n) and fails to satisfy the 
requirements of section 401(a)(9).
    (iii) Example 3--(A) Facts--(1) Background. Participant E has 10 
years of participation in Plan X, a frozen defined benefit plan. E 
retires in 2025 at a date when E's attained age is 72. E

[[Page 58930]]

elects to receive annual distributions from Plan X in the form of a 27-
year period certain annuity (that is, a 27-year annuity payment period 
without a life contingency) paid at a rate of $37,000 per year 
beginning in 2025 with future payments increasing at a rate of 4.00 
percent per year (that is, the 2026 payment will be $38,480, the 2027 
payment will be $40,019 and so on). Plan X offers participants in pay 
status whose annuity payments are in the form of a term-certain annuity 
the opportunity to modify their payment period at any time and treats 
the modifications as a new annuity starting date for the purposes of 
sections 415 and 417. Thus, for example, the plan provides a new 
qualified and joint survivor annuity election and obtains spousal 
consent.
    (2) Plan provisions for determination of actuarial equivalence. 
Plan X determines modifications of annuity payment amounts so that the 
present value of future new annuity payment amounts (taking into 
account the new associated payment period) is actuarially equivalent to 
the present value of future pre-modification annuity payments (taking 
into account the pre-modification annuity payment period). Actuarial 
equivalency for this purpose is determined using 5.00 percent and the 
applicable mortality table as of the date of modification.
    (3) Modification of retirement benefits paid to Participant E. In 
2028, E, after receiving annual payments of $37,000, $38,480, and 
$40,019, elects to receive the remaining distributions from Plan W in 
the form of a straight life annuity paid with annual payments of 
$92,133 per year.
    (B) Analysis. Because payment of retirement benefits in the form of 
a straight life annuity satisfies (in terms of form) section 401(a)(9), 
the condition under paragraph (n)(3)(i) of this section is met. Because 
Plan X treats a modification of an annuity payment stream at retirement 
as a new annuity starting date for purposes of sections 415 and 417, 
the condition under paragraph (n)(3)(ii) of this section is met. After 
taking into account the modification, the annuity stream determined as 
of the original annuity starting date consists of annual payments 
beginning at age 72 of $37,000, $38,480, and $40,019, and a straight 
life annuity beginning at age 75 of $92,133. This benefit stream is 
actuarially equivalent to a straight life annuity at age 72 of $81,924, 
calculated in accordance with section 415(b)(2)(E)(i), which is an 
amount less than the section 415 limit determined at the original 
annuity starting date. Thus, the condition under paragraph (n)(3)(iii) 
of this section is met. In addition, because the modified payment 
period does not include a period certain, paragraph (n)(3)(iv) of this 
section does not apply.
    (C) Conclusion. Because a stream of annuity payments in the form of 
a straight life annuity satisfies section 401(a)(9), and each of the 
conditions under paragraph (n)(3) of this section are satisfied, the 
modification of annuity payments to E meets the requirements of this 
paragraph (n).
    (o) Increase in annuity payments--(1) General rules. 
Notwithstanding the general rule under paragraph (a)(1) of this section 
prohibiting increases in annuity payments, the following increases in 
annuity payments are permitted--
    (i) An annual percentage increase that does not exceed the 
percentage increase in an eligible cost-of-living index (as defined in 
paragraph (o)(2) of this section) for a 12-month period ending in the 
year during which the increase occurs or the prior year;
    (ii) A percentage increase that occurs at specified times (for 
example, at specified ages) and does not exceed the cumulative total of 
annual percentage increases in an eligible cost-of-living index (as 
defined in paragraph (o)(2) of this section) after the annuity starting 
date, or if later, the date of the most recent percentage increase;
    (iii) An increase by a constant percentage, applied not less 
frequently than annually, at a rate that is less than 5 percent per 
year;
    (iv) An increase eliminating some or all of the reduction in the 
amount of the employee's payments to provide for a survivor benefit, 
but only if there is no longer a survivor benefit because the 
beneficiary whose life was being used to determine the period described 
in section 401(a)(9)(A)(ii) over which payments were being made dies or 
is no longer the employee's beneficiary pursuant to a qualified 
domestic relations order within the meaning of section 414(p);
    (v) An increase to pay increased benefits that result from a plan 
amendment;
    (vi) An increase to allow a beneficiary to convert the survivor 
portion of a joint and survivor annuity into a single-sum distribution 
upon the employee's death;
    (vii) An increase to the extent permitted in accordance with 
paragraph (o)(3) or (4); or
    (viii) An increase resulting from the resumption of benefits that 
were suspended pursuant to section 411(a)(3)(B), 418E, or 432(e)(9).
    (2) Eligible cost of living index--(i) In general. For purposes of 
this paragraph (o), an eligible cost-of-living index means an index 
described in paragraph (o)(2)(ii), (iii), or (iv) of this section.
    (ii) Consumer price index. An index is described in this paragraph 
(o)(2)(ii) if it is a consumer price index that is based on prices of 
all items (or all items excluding food and energy) and issued by the 
Bureau of Labor Statistics, including an index for a specific 
population (for example, urban consumers or urban wage earners and 
clerical workers) and an index for a geographic area or areas (for 
example, a metropolitan area or State).
    (iii) Consumer price index with banking. An index is described in 
this paragraph (o)(2)(iii) if it is a percentage adjustment based on a 
cost-of-living index described in paragraph (o)(2)(ii) of this section, 
or a fixed percentage if less. In any year when the cost-of-living 
index is lower than the fixed percentage, the fixed percentage may be 
treated as an increase in an eligible cost-of-living index, provided it 
does not exceed the sum of--
    (A) The cost-of-living index for that year, and
    (B) The accumulated excess of the annual cost-of-living index from 
each prior year over the fixed annual percentage used in that year 
(reduced by any amount previously utilized under this paragraph 
(o)(2)(iii)(B)).
    (iv) Adjustment based on compensation for position. An index is 
described in this paragraph (o)(2)(iv) if it is a percentage adjustment 
based on the increase in compensation for the position held by the 
employee at the time of retirement, and provided under either--
    (A) The terms of a governmental plan (within the meaning of section 
414(d)), or
    (B) The terms of a nongovernmental plan, as in effect on April 17, 
2002.
    (3) Additional permitted increases for annuity contracts purchased 
from insurance companies. Payments made from an annuity contract 
purchased from an insurance company will not fail to satisfy the 
nonincreasing payment requirement in paragraph (a)(1) of this section 
merely because the payments are increased in accordance with one or 
more of the following--
    (i) As a result of dividend payments or other payments that result 
from actuarial gains (within the meaning of paragraph (o)(5) of this 
section), but only if--
    (A) Actuarial gain is measured no less frequently than annually;
    (B) The resulting dividend payments or other payments are either 
paid no

[[Page 58931]]

later than the year following the year for which the actuarial 
experience is measured or paid in the same form as the payment of the 
annuity over the remaining period of the annuity (beginning no later 
than the year following the year for which the actuarial experience is 
measured); and
    (C) The issuer of the contract uses reasonable actuarial methods 
and assumptions, as determined in good faith, when calculating the 
initial annuity payments, the issuer's experience with respect to those 
factors, and the amount of the dividend payments or other payments;
    (ii) As a result of a shortening of the payment period with respect 
to the annuity or a full or partial commutation of the future annuity 
payments, provided that the amount of the payment pursuant to the 
commutation is determined using reasonable actuarial methods and 
assumptions, as determined in good faith by the issuer of the contract.
    (iii) To provide a final payment upon death that does not exceed 
the amount by which the total consideration paid for the contract 
exceeds the aggregate amount of prior distributions under the contract; 
or
    (iv) To provide a short-term advance of payments under the annuity, 
under which annuity payments that would otherwise satisfy the 
requirements of this section are paid up to one year before the 
payments were scheduled to be made.
    (4) Additional permitted increases for annuity payments from a 
qualified trust. Annuity payments made under a defined benefit plan 
qualified under section 401(a) (including payments under an annuity 
contract purchased from an insurance company that provides the same 
benefits that would have been payable under the defined benefit plan if 
an annuity contract had not been purchased, but not an annuity contract 
that provides other benefits) will not fail to satisfy the 
nonincreasing payment requirement in paragraph (a)(1) of this section 
merely because the payments are increased in accordance with one of the 
following--
    (i) As a result of dividend payments or other payments that result 
from actuarial gains (within the meaning of paragraph (o)(5) of this 
section), but only if--
    (A) The actuarial gain is measured no less frequently than 
annually;
    (B) The resulting dividend payments or other payments are either 
paid no later than the year following the year for which the actuarial 
experience is measured or paid in the same form as the annuity over the 
remaining period of the annuity (beginning no later than the year 
following the year for which the actuarial experience is measured);
    (C) The actuarial gain taken into account is limited to the 
actuarial gain from investment experience;
    (D) The assumed interest used to calculate actuarial gains is not 
less than 3 percent; and
    (E) The payments are not increasing by a constant percentage as 
described in paragraph (o)(1)(iii) of this section; or
    (ii) To provide a final payment upon the death of the employee that 
does not exceed the excess of the actuarial present value of the 
employee's accrued benefit (within the meaning of section 411(a)(7)) 
calculated as of the annuity starting date using the applicable 
interest rate and the applicable mortality table under section 417(e) 
(or, if greater, the total amount of employee contributions plus 
interest) over the total of payments before the death of the employee.
    (5) Actuarial gain defined. For purposes of this paragraph (o), 
actuarial gain means the difference between an amount determined using 
the actuarial assumptions (that is, investment return, mortality, 
expense, and other similar assumptions) used to calculate the initial 
payments before adjustment for any increases and the amount determined 
under the actual experience with respect to those factors. Actuarial 
gain also includes differences between the amount determined using 
actuarial assumptions when an annuity was purchased or commenced, and 
the amount determined using actuarial assumptions used in calculating 
payments at the time the actuarial gain is determined.
    (6) Examples. This paragraph (o) is illustrated by the following 
examples.
    (i) Example 1. Variable annuity--(A) Facts. A retired participant 
Z1 in Plan X, a defined contribution plan, attains age 72 in 2021. Z1 
elects to purchase Contract Y1 from Insurance Company W in 2025. 
Contract Y1 is a single life annuity contract with a 10-year period 
certain. Contract Y1 provides for an initial annual payment calculated 
with an assumed interest rate (AIR) of 3 percent, which is assumed for 
purposes of this example to be a reasonable interest rate selected in 
good faith. Subsequent payments are determined by multiplying the prior 
year's payment by a fraction, the numerator of which is 1 plus the 
actual return on the separate account assets underlying Contract Y1 
since the preceding payment (which is reasonably determined in good 
faith) and the denominator of which is 1 plus the AIR during that 
period.
    (B) Analysis. Under paragraph (o)(3)(i) of this section, payments 
made from an annuity contract purchased from an insurance company will 
not fail to satisfy the nonincreasing payment requirement on account of 
payment increases that result from actuarial gains (within the meaning 
of paragraph (o)(5) of this section), if the conditions set forth in 
paragraphs (o)(3)(i)(A) through (C) of this section are satisfied. The 
payment increases under Contract Y1 are the result of actuarial gain 
within the meaning of paragraph (o)(5) of this section because they are 
the result of the difference between investment experience and the 3 
percent interest rate used to calculate the initial payments under 
Contract Y1. Contract Y1 satisfies the requirement of paragraph 
(o)(3)(i)(A) of this section because actuarial gain under Contract Y1 
is measured annually. Contract Y1 satisfies the requirement of 
paragraph (o)(3)(i)(B) of this section because the actuarial gains are 
paid over the remaining period of the annuity beginning in the year 
following the year for which the actuarial experience is measured. 
Contract Y1 satisfies the requirement of paragraph (o)(3)(i)(C) of this 
section because the issuer of Contract Y1 used reasonable actuarial 
methods and assumptions, as determined in good faith, when calculating 
the initial annuity payments, the issuer's experience with respect to 
those factors, and the amount of adjustments under Contract Y1.
    (C) Conclusion. Because payments under Contract Y1 increase only as 
a result of actuarial gain, and those increases satisfy the conditions 
set forth in paragraphs (o)(3)(i)(A) through (C) of this section, those 
increases are described in paragraph (o)(3)(i) of this section and 
therefore are excepted from the nonincreasing payment requirement of 
paragraph (a)(1) of this section pursuant to the exception under 
paragraph (o)(1)(vii) of this section.
    (ii) Example 2. Participating annuity--(A) Facts. A retired 
participant Z2 in Plan X, a defined contribution plan, attains age 73 
in 2025. Z2 elects to purchase Contract Y2 from Insurance Company W in 
2025. Contract Y2 is a participating single life annuity contract with 
a 10-year period certain. Contract Y2 provides for level annual 
payments with dividends paid in a lump sum in the year after the year 
for which the actuarial experience is measured or paid out levelly 
beginning in the year after the year for which the actuarial gain is 
measured over the remaining lifetime and period certain (that is, the 
period certain ends at the same time as the original period

[[Page 58932]]

certain). Dividends are determined annually by the Board of Directors 
of Company W based upon a comparison of actual actuarial experience to 
expected actuarial experience in the past year, with those amounts 
determined on a reasonable basis in good faith. The initial payment was 
determined in good faith using reasonable actuarial assumptions and 
methods.
    (B) Analysis. Under paragraph (o)(3)(i) of this section, payments 
made from an annuity contract purchased from an insurance company will 
not fail to satisfy the nonincreasing payment requirement on account of 
payment increases that result from actuarial gains (within the meaning 
of paragraph (o)(5) of this section), if the conditions set forth in 
paragraphs (o)(3)(i)(A) through (C) of this section are satisfied. The 
payment increases under Contract Y2 are the result of actuarial gain 
within the meaning of paragraph (o)(5) of this section. Contract Y2 
satisfies the requirement of paragraph (o)(3)(i)(A) of this section 
because actuarial gain under Contract Y2 is measured annually. Contract 
Y2 satisfies the requirement of paragraph (o)(3)(i)(B) of this section 
because the resulting increases are paid either in the form of a lump 
sum or over the remaining period of the annuity beginning in the year 
following the year for which the actuarial experience is measured. 
Contract Y2 satisfies the requirement of paragraph (o)(3)(i)(C) of this 
section because the issuer of Contract Y2 used reasonable actuarial 
methods and assumptions, as determined in good faith, when calculating 
the initial annuity payments, the issuer's experience with respect to 
those factors, and the amount of adjustments under Contract Y2.
    (C) Conclusion. Because payments under Contract Y2 increase only as 
a result of actuarial gain, and those increases satisfy the conditions 
set forth in paragraphs (o)(3)(i)(A) through (C) of this section, those 
increases are described in paragraph (o)(3)(i) of this section and 
therefore are excepted from the nonincreasing payment requirement of 
paragraph (a)(1) of this section pursuant to the exception under 
paragraph (o)(1)(vii) of this section.
    (iii) Example 3. Participating annuity with dividend accumulation--
(A) Facts. The facts are the same as in paragraph (o)(6)(ii) of this 
section (Example 2), except that the annuity provides a dividend 
accumulation option under which Z2 may defer receipt of the dividends 
to a time selected by Z2.
    (B) Conclusion. Because the dividend accumulation option permits 
dividends to be paid commencing later than the end of the year 
following the year for which the actuarial experience is measured, the 
dividend accumulation option does not meet the requirements of 
paragraph (o)(3)(i)(B) of this section. Neither does the dividend 
accumulation option fit within any of the other permissible increases 
described in paragraph (o)(3) of this section. Accordingly, payment 
increases pursuant to the dividend accumulation option are not excepted 
from the nonincreasing payment requirement of paragraph (a)(1) of this 
section pursuant to the exception under paragraph (o)(1)(vii) of this 
section. Thus, Contract Y2, and consequently any distributions from the 
contract, fail to meet the requirements of this paragraph (o) and thus 
to fail to satisfy the requirements of section 401(a)(9).
    (iv) Example 4. Participating annuity with dividends used to 
purchase additional death benefits--(A) Facts. The facts are the same 
as in paragraph (o)(6)(ii) of this section (Example 2), except that the 
annuity provides an option under which actuarial gain under the 
contract is used to provide additional death benefit protection for Z2.
    (B) Conclusion. Because this option permits payments as a result of 
actuarial gain to be paid commencing later than the end of the year 
following the year for which the actuarial experience is measured, the 
option does not meet the requirements of paragraph (o)(3)(i)(B) of this 
section. Neither does the option fit within any of the other 
permissible increases described in paragraph (o)(3) of this section. 
Accordingly, payment increases pursuant to the dividend accumulation 
option are not excepted from the nonincreasing payment requirement of 
paragraph (a)(1) of this section pursuant to the exception under 
paragraph (o)(1)(vii) of this section. Thus, Contract Y2, and 
consequently any distributions from the contract, fail to meet the 
requirements of this paragraph (o) and thus to fail to satisfy the 
requirements of section 401(a)(9).
    (p) Payments to children--(1) In general. Payments under a defined 
benefit plan or annuity contract that are made to an employee's child 
until the child reaches the age of majority as provided in paragraph 
(p)(2) of this section (or dies, if earlier) may be treated, for 
purposes of section 401(a)(9), as if the payments under the defined 
benefit plan or annuity contract were made to the surviving spouse to 
the extent they become payable to the surviving spouse upon cessation 
of the payments to the child. Thus, when payments described in this 
paragraph (p)(1) become payable to the surviving spouse because the 
child attains the age of majority, there is not an increase in benefits 
under paragraph (a) of this section. Likewise, the age of the child 
receiving the payments described in this paragraph (p)(1) is not taken 
into consideration for purposes of the MDIB requirement of paragraph 
(b) of this section.
    (2) Age of majority--(i) General rule. Except as provided in 
paragraph (p)(2)(ii) of this section, the determination of when an 
employee's child attains the age of majority is made under the rules of 
Sec.  1.401(a)(9)-4(e)(3).
    (ii) Exception for preexisting plan terms. A defined benefit plan 
may apply a definition of the age of majority other than the definition 
in paragraph (p)(2)(i) of this section, but only if the plan terms 
regarding the age of majority--
    (A) Were adopted on or before February 24, 2022; and
    (B) Met the requirements of A-15 of 26 CFR 1.401(a)(9)-6 (as it 
appeared in the April 1, 2021, edition of 26 CFR part 1).
    (q) Qualifying longevity annuity contract--(1) Definition of 
qualifying longevity annuity contract. A qualifying longevity annuity 
contract (QLAC) is an annuity contract described in paragraph (d) of 
this section that is purchased from an insurance company for an 
employee and that, in accordance with the rules of application of 
paragraph (q)(4) of this section, satisfies each of the following 
requirements--
    (i) Premiums for the contract satisfy the limitations of paragraph 
(q)(2) of this section;
    (ii) The contract provides that distributions under the contract 
must commence not later than a specified annuity starting date that is 
no later than the first day of the month next following the 85th 
anniversary of the employee's birth;
    (iii) The contract provides that, after distributions under the 
contract commence, those distributions must satisfy the requirements of 
this section (other than the requirement in paragraph (a)(3) of this 
section that annuity payments commence on or before the required 
beginning date);
    (iv) After the required beginning date, the contract does not make 
available any commutation benefit, cash surrender right, or other 
similar feature (other than a right to rescind the contract within a 
period not exceeding 90 days from the date of purchase);
    (v) No benefits are provided under the contract after the death of 
the employee other than the benefits described in paragraph (q)(3) of 
this section;
    (vi) When the contract is issued (or December 31, 2016, if later), 
the contract

[[Page 58933]]

(or a rider or endorsement with respect to that contract) states that 
the contract is intended to be a QLAC; and
    (vii) The contract is not a variable contract under section 817, an 
indexed contract, or a similar contract, except to the extent provided 
by the Commissioner in revenue rulings, notices, or other guidance 
published in the Internal Revenue Bulletin (see Sec.  601.601(d) of 
this chapter).
    (2) Limitation on premiums--(i) In general. The premiums paid with 
respect to the contract on a date (premium payment date) satisfy the 
limitation of this paragraph (q)(2) if they do not exceed the dollar 
limitation of paragraph (q)(2)(ii) of this section.
    (ii) Dollar limitation. The dollar limitation as of a premium 
payment date is an amount by which $200,000 (as adjusted under 
paragraph (q)(4)(ii)(A) of this section), exceeds the sum of--
    (A) The premiums paid before that date with respect to the 
contract, and
    (B) The premiums paid on or before that date with respect to any 
other contract that is intended to be a QLAC and that is purchased for 
the employee under the plan, or any other plan, annuity, or account 
described in section 401(a), 403(a), 403(b), or 408 or eligible 
governmental plan under section 457(b).
    (iii) Exchange of insurance contract for QLAC. For purposes of this 
paragraph (q)(2), if an insurance contract is exchanged for a contract 
intended to be a QLAC, the fair market value of the exchanged contract 
will be treated as a premium paid for the QLAC. However, if an 
insurance contract is surrendered for its cash value, the surrender 
extinguishes all benefits and other characteristics of the contract, 
and the cash is used to purchase a QLAC, then only the cash from the 
surrendered contract is treated as a premium paid for the QLAC.
    (3) Payments after death of the employee--(i) Surviving spouse is 
sole beneficiary--(A) Death on or after annuity starting date. If the 
employee dies on or after the annuity starting date for the contract 
and the employee's surviving spouse is the sole beneficiary under the 
contract then, except as provided in paragraph (q)(3)(iv) of this 
section, the only benefit permitted to be paid after the employee's 
death is a life annuity payable to the surviving spouse under which the 
periodic annuity payment does not exceed 100 percent of the periodic 
annuity payment that was payable to the employee.
    (B) Death before annuity starting date. If the employee dies before 
the annuity starting date and the employee's surviving spouse is the 
sole beneficiary under the contract, then, except as provided in 
paragraph (q)(3)(iv) of this section, the only benefit permitted to be 
paid after the employee's death is a life annuity payable to the 
surviving spouse under which the periodic annuity payment does not 
exceed 100 percent of the periodic annuity payment that would have been 
payable to the employee as of the date that benefits to the surviving 
spouse commence. However, the annuity is permitted to exceed 100 
percent of the periodic annuity payment that would have been payable to 
the employee to the extent necessary to satisfy the requirement to 
provide a qualified preretirement survivor annuity (as defined under 
section 417(c)(2) of the Code or section 205(e)(2) of the Employee 
Retirement Income Security Act of 1974, Pub. L. 93-406, 88 Stat. 829, 
as amended (ERISA), pursuant to section 401(a)(11)(A)(ii) of the Code 
or section 205(a)(2) of ERISA). Any life annuity payable to the 
surviving spouse under this paragraph (q)(3)(i)(B) must commence no 
later than the date on which the annuity payable to the employee would 
have commenced under the contract if the employee had not died.
    (ii) Surviving spouse is not sole beneficiary--(A) Death on or 
after annuity starting date. If the employee dies on or after the 
annuity starting date for the contract and the employee's surviving 
spouse is not the sole beneficiary under the contract then, except as 
provided in paragraph (q)(3)(iv) of this section, the only benefit 
permitted to be paid after the employee's death is a life annuity 
payable to the designated beneficiary under which the periodic annuity 
payment does not exceed the applicable percentage (determined under 
paragraph (q)(3)(iii) of this section) of the periodic annuity payment 
that is payable to the employee.
    (B) Death before annuity starting date. If the employee dies before 
the annuity starting date and the employee's surviving spouse is not 
the sole beneficiary under the contract, then, except as provided in 
paragraph (q)(3)(iv) of this section, the only benefit permitted to be 
paid after the employee's death is a life annuity payable to the 
designated beneficiary under which the periodic annuity payment is not 
in excess of the applicable percentage (determined under paragraph 
(q)(3)(iii) of this section) of the periodic annuity payment that would 
have been payable to the employee as of the date that benefits to the 
designated beneficiary commence under this paragraph (q)(3)(ii)(B). In 
any case in which the employee dies before the annuity starting date, 
any life annuity payable to a designated beneficiary under this 
paragraph (q)(3)(ii)(B) must commence by the last day of the calendar 
year following the calendar year of the employee's death.
    (C) Designated beneficiary who is not an eligible designated 
beneficiary. Benefits paid to a designated beneficiary under this 
paragraph (q)(3)(ii) must satisfy the rules of section 401(a)(9)(H) and 
paragraph (d)(2) of this section.
    (iii) Applicable percentage--(A) Contracts without pre-annuity 
starting date death benefits. If, as described in paragraph 
(q)(3)(iii)(E) of this section, the contract does not provide for a 
pre-annuity starting date non-spousal death benefit, the applicable 
percentage is the percentage described in the table in paragraph (b)(3) 
of this section.
    (B) Contracts with set beneficiary designation. If the contract 
provides for a set non-spousal beneficiary designation as described in 
paragraph (q)(3)(iii)(F) of this section (and is not a contract 
described in paragraph (q)(3)(iii)(E) of this section), the applicable 
percentage is the percentage described in table 6 to paragraph 
(q)(3)(iii)(D).
    (C) Contracts providing for return of premium. If the contract 
provides for a return of premium as described in paragraph (q)(3)(v) of 
this section, the applicable percentage is 0.
    (D) Applicable percentage table. The applicable percentage is the 
percentage specified in following table for the adjusted employee/
beneficiary age difference, determined in the same manner as in 
paragraph (b)(2)(iii) of this section.

                   Table 6 to Paragraph (q)(3)(iii)(D)
------------------------------------------------------------------------
                                                              Applicable
        Adjusted employee/beneficiary age difference          percentage
------------------------------------------------------------------------
2 years or less............................................          100
3..........................................................           88
4..........................................................           78
5..........................................................           70
6..........................................................           63
7..........................................................           57
8..........................................................           52
9..........................................................           48
10.........................................................           44
11.........................................................           41
12.........................................................           38
13.........................................................           36
14.........................................................           34
15.........................................................           32
16.........................................................           30
17.........................................................           28
18.........................................................           27
19.........................................................           26
20.........................................................           25
21.........................................................           24

[[Page 58934]]

 
22.........................................................           23
23.........................................................           22
24.........................................................           21
25 and greater.............................................           20
------------------------------------------------------------------------

    (E) No pre-annuity starting date non-spousal death benefit. A 
contract is described in this paragraph (q)(3)(iii)(E) if the contract 
provides that no benefit may be paid to a beneficiary other than the 
employee's surviving spouse after the employee's death--
    (1) In any case in which the employee dies before the annuity 
starting date under the contract; and
    (2) In any case in which the employee selects an annuity starting 
date that is earlier than the specified annuity starting date under the 
contract and the employee dies less than 90 days after making that 
election.
    (F) Contracts permitting set non-spousal beneficiary designation. A 
contract provides for a set non-spousal beneficiary designation as 
described in this paragraph (q)(3)(iii)(F) if the contract provides 
that, if the beneficiary under the contract is not the employee's 
surviving spouse, then benefits are payable to the beneficiary only if 
the beneficiary was irrevocably designated on or before the later of 
the date of purchase and the employee's required beginning date. A 
contract does not fail to be described in the preceding sentence merely 
because the surviving spouse becomes the sole beneficiary before the 
annuity starting date. In those circumstances, the requirements of 
paragraph (q)(3)(i) of this section apply and not the requirements of 
this paragraph (q)(3)(iii).
    (iv) Calculation of early annuity payments. For purposes of 
paragraphs (q)(3)(i)(B) and (ii)(B) of this section, to the extent the 
contract does not provide an option for the employee to select an 
annuity starting date that is earlier than the date on which the 
annuity payable to the employee would have commenced under the contract 
if the employee had not died, the contract must provide a way to 
determine the periodic annuity payment that would have been payable if 
the employee were to have an option to accelerate the payments and the 
payments had commenced to the employee immediately prior to the date 
that benefit payments to the surviving spouse or designated beneficiary 
commence.
    (v) Return of premiums--(A) In general. In lieu of a life annuity 
payable to a designated beneficiary under paragraph (q)(3)(i) or (ii) 
of this section, a QLAC may provide for a benefit to be paid to a 
beneficiary after the death of the employee up to the amount by which 
the premium payments made with respect to the QLAC exceed the payments 
already made under the QLAC.
    (B) Payments after death of surviving spouse. If a QLAC is 
providing a life annuity to a surviving spouse (or will provide a life 
annuity to a surviving spouse) under paragraph (q)(3)(i) of this 
section, it may also provide for a benefit payable to a beneficiary 
after the death of both the employee and the spouse up to the amount by 
which the premium payments made with respect to the QLAC exceed the 
payments already made under the QLAC.
    (C) Timing of return of premium payment and other rules. A return 
of premium payment under this paragraph (q)(3)(v) must be paid no later 
than the end of the calendar year following the calendar year in which 
the employee dies. If the employee's death is after the required 
beginning date, the return of premium payment is treated as a required 
minimum distribution for the year in which it is paid and is not 
eligible for rollover. If the return of premium payment is paid after 
the death of a surviving spouse who is receiving a life annuity (or 
after the death of a surviving spouse who has not yet commenced 
receiving a life annuity after the death of the employee), the return 
of premium payment under this paragraph (q)(3)(v) must be made no later 
than the end of the calendar year following the calendar year in which 
the surviving spouse dies. If the surviving spouse's death is after the 
required beginning date for the surviving spouse, then the return of 
premium payment is treated as a required minimum distribution for the 
year in which it is paid and is not eligible for rollover.
    (vi) Multiple beneficiaries. If an employee has more than one 
designated beneficiary under a QLAC, the rules in Sec.  1.401(a)(9)-
8(a) apply for purposes of paragraphs (q)(3)(i) and (ii) of this 
section.
    (vii) Treatment of former spouses--(A) In general. The payment of 
survivor benefits to the employee's former spouse under an annuity 
contract will not cause the contract to fail to satisfy the 
requirements of this paragraph (q)(3) merely because the divorce 
between the employee and that former spouse occurred after the contract 
is purchased, provided that a qualified domestic relations order 
described in section 414(p) (or, to the extent provided in paragraph 
(q)(3)(vii)(B) of this section, a divorce or separation instrument) 
satisfying the requirements of paragraph (q)(3)(vii)(C) of this section 
has been issued in connection with the divorce.
    (B) [Reserved]
    (C) Applicable requirements. This paragraph (q)(3)(vii)(C) is 
satisfied if the qualified domestic relations order (or divorce or 
separation instrument) issued in connection with the divorce--
    (1) Provides that the former spouse is entitled to the survivor 
benefits under the contract;
    (2) Provides that the former spouse is treated as a surviving 
spouse for purposes of the contract;
    (3) Does not modify the treatment of the former spouse as the 
beneficiary under the contract who is entitled to the survivor 
benefits; or
    (4) Does not modify the treatment of the former spouse as the 
measuring life for the survivor benefits under the contract.
    (4) Rules of application--(i) Rules relating to premiums--(A) 
Reliance on representations. For purposes of the limitation on premiums 
described in paragraph (q)(2) of this section, unless the plan 
administrator has actual knowledge to the contrary, the plan 
administrator may rely on an employee's representation (made in writing 
or such other form as may be prescribed by the Commissioner) of the 
amount of the premiums described in paragraph (q)(2)(ii)(B) of this 
section, but only with respect to premiums that are not paid under a 
plan, annuity, or contract that is maintained by the employer or an 
entity that is treated as a single employer with the employer under 
section 414(b), (c), (m), or (o).
    (B) Consequences of excess premiums and correction. If an annuity 
contract fails to be a QLAC solely because a premium for the contract 
exceeds the limits under paragraph (q)(2) of this section, then the 
contract is not a QLAC beginning on the date on which the premium is 
paid and the value of the contract may not be disregarded under Sec.  
1.401(a)(9)-5(b)(4) as of the date on which the contract ceases to be a 
QLAC (unless the excess premium is returned to the non-QLAC portion of 
the employee's account in accordance with the next sentence). However, 
if the excess premium is returned (either in cash or in the form of a 
contract that is not intended to be a QLAC) to the non-QLAC portion of 
the employee's account by the end of the calendar year following the 
calendar year in which the excess premium was originally paid, then the 
contract will not be treated as exceeding the limits under paragraph

[[Page 58935]]

(q)(2) of this section at any time, and the value of the contract will 
not be included in the employee's account balance under Sec.  
1.401(a)(9)-5(b)(4). If the excess premium (including the fair market 
value of an annuity contract that is not intended to be a QLAC, if 
applicable) is returned to the non-QLAC portion of the employee's 
account after the last valuation date for the calendar year in which 
the excess premium was originally paid, then the employee's account 
balance for that calendar year must be increased to reflect that excess 
premium in the same manner as an employee's account balance is 
increased under Sec.  1.401(a)(9)-7(b) to reflect a rollover received 
after the last valuation date. If the excess premium is returned to the 
non-QLAC portion of the employee's account as described in paragraph 
(q)(4)(ii)(B) of this section, it will not be treated as a violation of 
the requirement in paragraph (q)(1)(iv) of this section that the 
contract not provide a commutation benefit.
    (ii) Dollar and age limitations subject to adjustments--(A) Dollar 
limitation. The $200,000 amount under paragraph (q)(2)(ii) of this 
section will be adjusted at the same time and in the same manner as the 
limits are adjusted under section 415(d), except that--
    (1) The base period is the calendar quarter beginning July 1, 2022; 
and
    (2) The amount of any increment to the limit that is not a multiple 
of $10,000 will be rounded to the next lowest multiple of $10,000.
    (B) Age limitation. The maximum age set forth in paragraph 
(q)(1)(ii) of this section may be adjusted to reflect changes in 
mortality, with any adjusted age to be prescribed by the Commissioner 
in revenue rulings, notices, or other guidance published in the 
Internal Revenue Bulletin. See Sec.  601.601(d) of this chapter.
    (C) Prospective application of adjustments. If a contract fails to 
be a QLAC because it does not satisfy the dollar limitation in 
paragraph (q)(2)(ii) of this section or the age limitation in paragraph 
(q)(1)(ii) of this section, any subsequent adjustment that is made 
pursuant to this paragraph (q)(4)(ii) will not cause the contract to 
become a QLAC.
    (iii) Determination of whether contract is intended to be a QLAC--
(A) Structural deficiency. If a contract fails to be a QLAC at any time 
for a reason other than an excess premium described in paragraph 
(q)(4)(i)(B) of this section, then, as of the date of purchase, the 
contract will not be treated as a QLAC (for purposes of Sec.  
1.401(a)(9)-5(b)(4)) or as a contract that is intended to be a QLAC 
(for purposes of paragraph (q)(2) of this section).
    (B) Roth IRAs. A contract that is purchased under a Roth IRA is not 
treated as a contract that is intended to be a QLAC for purposes of 
applying the dollar limitation rule in paragraph (q)(2)(ii) of this 
section. See A-14(d) of Sec.  1.408A-6. If a QLAC is purchased or held 
under a plan, annuity, account, or traditional IRA, and that contract 
is later rolled over or converted to a Roth IRA, the contract is not 
treated as a contract that is intended to be a QLAC after the date of 
the rollover or conversion. Thus, premiums paid with respect to the 
contract will not be taken into account under paragraph (q)(2)(ii) of 
this section after the date of the rollover or conversion.
    (iv) Certain contract features permitted for QLACs--(A) 
Participating annuity contract. An annuity contract does not fail to 
satisfy the requirement of paragraph (q)(1)(vii) of this section merely 
because it provides for the payment of dividends described in paragraph 
(n)(3)(iii) of this section.
    (B) Contracts with cost-of-living adjustments. An annuity contract 
does not fail to satisfy the requirement of paragraph (q)(1)(vii) of 
this section merely because it provides for a cost-of-living adjustment 
as described in paragraph (o)(2) of this section.
    (v) Group annuity contract certificates. The requirement under 
paragraph (q)(1)(vi) of this section that the contract state that it is 
intended to be a QLAC when issued is satisfied if a certificate is 
issued under a group annuity contract and the certificate, when issued, 
states that the employee's interest under the group annuity contract is 
intended to be a QLAC.


Sec.  1.401(a)(9)-7  Rollovers and transfers.

    (a) Treatment of rollover from distributing plan. If an amount is 
distributed by a plan, then the amount distributed is still taken into 
account by the distributing plan for purposes of satisfying the 
requirements of section 401(a)(9), even if part of the distribution is 
rolled over into another eligible retirement plan described in section 
402(c)(8). However, an amount that is a required minimum distribution 
under section 401(a)(9) is not eligible to be rolled over (and is 
therefore includible in the taxpayer's gross income under section 402). 
For this purpose, the amount that constitutes a required minimum 
distribution for a calendar year is determined in accordance with Sec.  
1.402(c)-2(f) for a distribution to an employee and Sec.  1.402(c)-2(j) 
for a distribution to a beneficiary.
    (b) Treatment of rollover by receiving plan. If an amount is 
distributed by one plan (distributing plan) and is rolled over to 
another plan (receiving plan), the benefit of the employee under the 
receiving plan is increased by the amount rolled over for purposes of 
determining the required minimum distribution for the calendar year 
following the calendar year in which the amount rolled over was 
distributed. If the amount rolled over is received after the last 
valuation date in the calendar year under the receiving plan, the 
benefit of the employee as of that valuation date, adjusted in 
accordance with Sec.  1.401(a)(9)-5(b), is increased by the rollover 
amount valued as of the date of receipt. In addition, if the amount 
rolled over is received in a different calendar year from the calendar 
year in which it is distributed, the amount rolled over is deemed to 
have been received by the receiving plan on the last day of the 
calendar year in which it was distributed.
    (c) Treatment of transfer under transferor plan--(1) Generally not 
treated as distribution. In the case of a transfer of an amount of an 
employee's benefit from one plan (transferor plan) to another plan 
(transferee plan), the transfer is not treated as a distribution by the 
transferor plan for purposes of section 401(a)(9). Instead, the benefit 
of the employee under the transferor plan is decreased by the amount 
transferred. However, if any portion of an employee's benefit is 
transferred in a distribution calendar year with respect to that 
employee, in order to satisfy the requirements of section 401(a)(9), 
the transferor plan must determine the amount of the required minimum 
distribution with respect to that employee for the calendar year of the 
transfer using the employee's benefit under the transferor plan before 
the transfer. Additionally, if any portion of an employee's benefit is 
transferred in the employee's second distribution calendar year, but on 
or before the employee's required beginning date, in order to satisfy 
section 401(a)(9), the transferor plan must determine the amount of the 
required minimum distribution for the employee's first distribution 
calendar year based on the employee's benefit under the transferor plan 
before the transfer. The transferor plan may satisfy the minimum 
distribution requirement for the calendar year of the transfer (and the 
prior year if applicable) by segregating the amount that must be 
distributed from the employee's benefit and not transferring that 
amount. That amount may be retained by the transferor plan

[[Page 58936]]

and must be distributed on or before the date required under section 
401(a)(9).
    (2) Account balance decreased after transfer. For purposes of 
determining any required minimum distribution for the calendar year 
following the calendar year in which the transfer occurs, in the case 
of a transfer after the last valuation date for the calendar year of 
the transfer under the transferor plan, the benefit of the employee as 
of that valuation date, adjusted in accordance with Sec.  1.401(a)(9)-
5(b), is decreased by the amount transferred, valued as of the date of 
the transfer.
    (d) Treatment of transfer under transferee plan. In the case of a 
transfer from a transferor plan to a transferee plan, the benefit of 
the employee under the transferee plan is increased by the amount 
transferred in the same manner as if it were a plan receiving a 
rollover contribution under paragraph (b) of this section.
    (e) Treatment of spinoff or merger. For purposes of determining an 
employee's benefit and required minimum distribution under section 
401(a)(9), a spinoff, a merger, or a consolidation (as defined in Sec.  
1.414(l)-1(b)) is treated as a transfer of the benefits of the 
employees involved. Consequently, the benefit and required minimum 
distribution with respect to each employee whose benefits are 
transferred will be determined in accordance with paragraphs (c) and 
(d) of this section.


Sec.  1.401(a)(9)-8  Special rules.

    (a) Use of separate accounts--(1) Separate application of section 
401(a)(9) for each beneficiary--(i) In general. Except as otherwise 
provided in this paragraph (a)(1), for calendar years beginning after 
the calendar year in which the employee dies, section 401(a)(9) is 
applied separately with respect to the separate interests of each of 
the employee's beneficiaries under the plan provided that those 
interests are held in separate accounts that satisfy the separate 
accounting requirements of paragraphs (a)(2)(i) and (ii) of this 
section.
    (ii) Separate accounting requirements not timely satisfied. If the 
separate accounts that satisfy the separate accounting requirements of 
paragraph (a)(2) of this section are not established until after the 
end of the calendar year following the calendar year of the employee's 
death, then for distribution calendar years after those requirements 
are satisfied--
    (A) The aggregate required distribution for a distribution calendar 
year is determined without regard to the separate account rule in 
paragraph (a)(1)(i) of this section;
    (B) The amount of the aggregate required distribution determined in 
accordance with paragraph (a)(1)(ii)(A) of this section is allocated 
among the beneficiaries based on each respective beneficiary's share of 
the total remaining balance of the employee's interest in the plan; and
    (C) The allocated share for each beneficiary determined under 
paragraph (a)(2)(ii)(B) of this section is required to be distributed 
to that beneficiary.
    (iii) Separate application of section 401(a)(9) for trust 
beneficiaries--(A) General prohibition. Except as provided in paragraph 
(a)(1)(iii)(B) of this section, section 401(a)(9) may not be applied 
separately to the separate interests of each of the beneficiaries of a 
see-through trust described in Sec.  1.401(a)(9)-4(f)(1)(i). For 
purposes of the excise tax under section 4974, unless the exception in 
paragraph (a)(1)(iii)(B) of this section applies, the trust is the 
payee with respect to the required distribution of the employee's 
interest in the plan.
    (B) Exception for certain trusts divided upon the death of the 
employee. Section 401(a)(9) is applied separately with respect to the 
separate interests of the beneficiaries of a see-through trust if the 
terms of the trust provide that it is to be divided immediately upon 
the death of the employee, provided that the requirements in paragraph 
(a)(1)(iii)(C) of this section are satisfied. The preceding sentence 
applies only if the separate interests are held in separate see-through 
trusts (in which case the rules of Sec. Sec.  1.401(a)(9)-4(f) and 
1.401(a)(9)-5 will apply separately to each separate trust).
    (C) Immediately divided defined. For purposes of paragraph 
(a)(1)(iii)(B) of this section, a trust is immediately divided upon the 
death of the employee only if, as of the date of death, the trust is 
terminated and there is no discretion as to the extent to which of the 
separate trusts post-death distributions attributable to the employee's 
interest in the plan are allocated. A trust does not fail to be 
immediately divided upon the death of the employee merely because there 
are administrative delays between the date of the employee's death and 
the date on which the trust is divided and terminated, provided that 
any amounts received by the trust during this period are allocated as 
if the trust had been divided on the date of the employee's death.
    (2) Separate accounting requirements--(i) Allocation of post-death 
distributions required. A separate accounting satisfies the 
requirements of this paragraph (a)(2)(i) only if all post-death 
distributions with respect to a beneficiary's interest are allocated to 
the separate account of the beneficiary receiving the distributions.
    (ii) Allocation of other items. A separate accounting satisfies the 
requirements of this paragraph (a)(2)(ii) if all post-death investment 
gains and losses, contributions, forfeitures, and expenses for the 
period prior to the establishment of the separate accounts are 
allocated on a pro rata basis in a reasonable and consistent manner 
among the separate accounts. The separate accounting does not fail to 
satisfy the requirements of this paragraph (a)(2)(ii) merely because, 
in lieu of a pro rata allocation of investment gains and losses--
    (A) Separate accounts are established that have separate 
investments; and
    (B) The investment gains and losses attributable to assets held in 
each of those separate accounts are allocated only to that separate 
account.
    (b) Application of consent requirements. Section 411(a)(11) and 
section 417(e) require employee and spousal consent to certain 
distributions of plan benefits while those benefits are immediately 
distributable. If an employee's normal retirement age is later than the 
employee's required beginning date and, therefore, benefits are still 
immediately distributable (within the meaning of Sec.  1.411(a)-
11(c)(4)), distributions must be made to the employee (or, if 
applicable, to the employee's spouse) in a manner that satisfies the 
requirements of section 401(a)(9) even though the employee (or, if 
applicable, the employee's spouse) fails to consent to the 
distribution. In that case, the benefit may be distributed in the form 
of a qualified joint and survivor annuity (QJSA) or in the form of a 
qualified preretirement survivor annuity (QPSA), as applicable, and the 
consent requirements of sections 411(a)(11) and 417(e) are deemed to be 
satisfied if the plan has made reasonable efforts to obtain consent 
from the employee (or, if applicable, the employee's spouse) and if the 
distribution otherwise meets the requirements of section 417. If the 
distribution is not required to be in the form of a QJSA to an employee 
or a QPSA to a surviving spouse, the required minimum distribution 
amount may be paid to satisfy section 401(a)(9), and the consent 
requirements of sections 411(a)(11) and 417(e) are deemed to be 
satisfied if the plan has made reasonable efforts to obtain consent 
from the employee (or, if applicable, the employee's spouse) and the 
distribution otherwise meets the requirements of section 417.

[[Page 58937]]

    (c) Definition of spouse. Except as otherwise provided in paragraph 
(d)(1) of this section (in the case of distributions of a portion of an 
employee's benefit payable to a former spouse of an employee pursuant 
to a qualified domestic relations order), for purposes of satisfying 
the requirements of section 401(a)(9), an individual is the spouse or 
surviving spouse of an employee if the marriage of the employee and 
individual is recognized for Federal tax purposes under the rules of 
Sec.  301.7701-18. In the case of distributions after the death of an 
employee, for purposes of section 401(a)(9), the spouse of the employee 
is determined as of the date of death of the employee.
    (d) Treatment of QDROs--(1) Continued treatment of spouse. A former 
spouse to whom all or a portion of the employee's benefit is payable 
pursuant to a qualified domestic relations order described in section 
414(p) (QDRO) is treated as a spouse (including a surviving spouse) of 
the employee for purposes of satisfying the requirements of section 
401(a)(9), including the minimum distribution incidental benefit 
requirement under section 401(a)(9)(G), regardless of whether the QDRO 
specifically provides that the former spouse is treated as the spouse 
for purposes of sections 401(a)(11) and 417.
    (2) Separate accounts--(i) In general--(A) Separate accounts while 
the employee is alive. If a QDRO provides that an employee's benefit is 
to be divided and a portion is to be allocated to an alternate payee, 
that portion will be treated as a separate account (or segregated 
share) that separately must satisfy the requirements of section 
401(a)(9) and may not be aggregated with other separate accounts (or 
segregated shares) of the employee for purposes of satisfying section 
401(a)(9). Except as otherwise provided in paragraph (f)(2)(ii) of this 
section, distribution of a separate account allocated to an alternate 
payee pursuant to a QDRO must be made in accordance with section 
401(a)(9). For example, distributions of the separate account will 
satisfy section 401(a)(9)(A) if required minimum distributions from the 
separate account during the employee's lifetime begin no later than the 
employee's required beginning date and the required minimum 
distribution is determined in accordance with Sec.  1.401(a)(9)-5 for 
each distribution calendar year using an applicable denominator 
determined under Sec.  1.401(a)(9)-5(c) (determined by treating the 
spousal alternate payee as the employee's spouse).
    (B) Separate accounts after the death of the employee. The 
determination of whether distributions from the separate account after 
the death of the employee to the alternate payee will be made in 
accordance with section 401(a)(9)(B)(i), or in accordance with section 
401(a)(9)(B)(ii) or (iii) and (iv), will depend on whether 
distributions have begun as determined under Sec.  1.401(a)(9)-2(a)(3) 
(which provides, in general, that distributions are not treated as 
having begun until the employee's required beginning date even though 
payments may actually have begun before that date). For example, if the 
alternate payee dies before the employee, and if distributions of the 
separate account allocated to the alternate payee pursuant to the QDRO 
are to be made to the alternate payee's beneficiary, then that 
beneficiary may be treated as a designated beneficiary for purposes of 
determining the required minimum distribution from the separate account 
after the death of the employee, provided that the beneficiary of the 
alternate payee is an individual who is a beneficiary under the plan or 
specified to or in the plan. Specification in or pursuant to the QDRO 
is treated as specification to the plan.
    (ii) Satisfaction of section 401(a)(9) requirements. Distribution 
of the separate account allocated to an alternate payee pursuant to a 
QDRO satisfies the requirements of section 401(a)(9)(A)(ii) if the 
separate account is distributed, beginning no later than the employee's 
required beginning date, over the life of the alternate payee (or over 
a period not extending beyond the life expectancy of the alternate 
payee). Also, if, pursuant to Sec.  1.401(a)(9)-3(b)(4)(iii) or 
(c)(5)(iii), the plan permits the employee to elect the distribution 
method that will apply upon the death of the employee, that election is 
to be made only by the alternate payee for purposes of distributing the 
alternate payee's separate account. If the alternate payee dies after 
distribution of the alternate payee's separate account has begun 
(determined under Sec.  1.401(a)(9)-2(a)(3)) but before the employee 
dies, distribution of the remaining portion of that portion of the 
benefit allocated to the alternate payee must be made in accordance 
with the rules in Sec.  1.401(a)(9)-5(c) or Sec.  1.401(a)(9)-6(a) for 
distributions during the life of the employee. Only after the death of 
the employee is the amount of the required minimum distribution 
determined in accordance with the rules in Sec.  1.401(a)(9)-5(d) or 
Sec.  1.401(a)(9)-6(b).
    (3) Other situations. If a QDRO does not provide that an employee's 
benefit is to be divided but provides that a portion of an employee's 
benefit (otherwise payable to the employee) is to be paid to an 
alternate payee, that portion is not treated as a separate account (or 
segregated share) of the employee. Instead, that portion is aggregated 
with any amount distributed to the employee and treated as having been 
distributed to the employee for purposes of determining whether section 
401(a)(9) has been satisfied with respect to that employee.
    (e) Application of section 401(a)(9) pending determination of 
whether a domestic relations order is a QDRO is being made. A plan does 
not fail to satisfy the requirements of section 401(a)(9) merely 
because it fails to distribute an amount otherwise required to be 
distributed by section 401(a)(9) during the period in which the issue 
of whether a domestic relations order is a QDRO is being determined 
pursuant to section 414(p)(7), provided that the period does not extend 
beyond the 18-month period described in section 414(p)(7)(E). To the 
extent that a distribution otherwise required under section 401(a)(9) 
is not made during this period, any segregated amounts, as defined in 
section 414(p)(7)(A), are treated as though the amounts are not vested 
during the period and any distributions with respect to those amounts 
must be made under the relevant rules for nonvested benefits described 
in either Sec.  1.401(a)(9)-5(g)(1) or Sec.  1.401(a)(9)-6(f), as 
applicable.
    (f) Application of section 401(a)(9) when insurer is in State 
delinquency proceedings. A plan does not fail to satisfy the 
requirements of section 401(a)(9) merely because an individual's 
distribution from the plan is less than the amount otherwise required 
to satisfy section 401(a)(9) because distributions were being paid 
under an annuity contract issued by a life insurance company in State 
insurer delinquency proceedings and have been reduced or suspended by 
reason of those State proceedings. To the extent that a distribution 
otherwise required under section 401(a)(9) is not made during the State 
insurer delinquency proceedings, that amount and any additional amount 
accrued during that period are treated as though those amounts are not 
vested during that period and any distributions with respect to those 
amounts must be made under the relevant rules for nonvested benefits 
described in either Sec.  1.401(a)(9)-5(g)(1) or Sec.  1.401(a)(9)-
6(f), as applicable.
    (g) In-service distributions required to satisfy section 401(a)(9). 
A plan does not fail to qualify as a pension plan within the meaning of 
section 401(a) solely because the plan permits

[[Page 58938]]

distributions to commence to an employee on or after the employee's 
required beginning date (as determined in accordance with Sec.  
1.401(a)(9)-2(b)) even though the employee has not retired or attained 
the normal retirement age under the plan as of the date on which the 
distributions commence. This rule applies without regard to whether the 
employee is a 5-percent owner with respect to the plan year ending in 
the calendar year in which distributions commence.
    (h) TEFRA section 242(b) elections--(1) In general. Even though the 
distribution requirements added by the Tax Equity and Fiscal 
Responsibility Act of 1982, Public Law 97-248, 96 Stat. 324 (1982) 
(TEFRA), were retroactively repealed in 1984, the transitional election 
rule in section 242(b) of TEFRA (referred to as a section 242(b)(2) 
election in this paragraph (h)) was preserved. While sections 
401(a)(11) and 417 must be satisfied with respect to any distribution 
subject to those requirements, satisfaction of those requirements is 
not considered a revocation of the section 242(b) election.
    (2) Application of section 242(b) election after transfer--(i) 
Section 242(b)(2) election made under transferor plan. If an amount is 
transferred from one plan (transferor plan) to another plan (transferee 
plan), the amount transferred may be distributed in accordance with a 
section 242(b)(2) election made under the transferor plan if the 
employee did not elect to have the amount transferred and if the 
transferee plan separately accounts for the amount transferred. 
However, only the benefit attributable to the amount transferred, plus 
earnings thereon, may be distributed in accordance with the section 
242(b)(2) election made under the transferor plan. If the employee 
elected to have the amount transferred or the transferee plan does not 
separately account for the amount transferred, the transfer is treated 
as a distribution and rollover of the amount transferred for purposes 
of this section.
    (ii) Section 242(b)(2) election made under transferee plan. If an 
amount is transferred from one plan to another plan, the amount 
transferred may not be distributed in accordance with a section 
242(b)(2) election made under the transferee plan. If a section 
242(b)(2) election was made under the transferee plan, the transferee 
plan must separately account for the amount transferred. If the 
transferee plan does not separately account for the amount transferred, 
the section 242(b)(2) election under the transferee plan is revoked, 
and subsequent distributions by the transferee plan must satisfy 
section 401(a)(9).
    (iii) Spinoff, merger, or consolidation treated as transfer. A 
spinoff, merger, or consolidation, as defined in Sec.  1.414(l)-1(b), 
is treated as a transfer for purposes of the section 242(b)(2) 
election.
    (3) Application of section 242(b) election after rollover. If an 
amount is distributed from one plan (distributing plan) and rolled over 
into another plan (receiving plan), the amount rolled over must be 
distributed from the receiving plan in accordance with section 
401(a)(9) whether or not the employee made a section 242(b)(2) election 
under the distributing plan. Further, if the amount rolled over was not 
distributed in accordance with the election, the election under the 
distributing plan is revoked and all subsequent distributions by the 
distributing plan must satisfy section 401(a)(9). Finally, if the 
employee made a section 242(b)(2) election under the receiving plan and 
the election is still in effect, the receiving plan must separately 
account for the amount rolled over and distribute that amount in 
accordance with section 401(a)(9). If the receiving plan does not 
separately account for the amounts rolled over, any section 242(b)(2) 
election under the receiving plan is revoked and subsequent 
distributions under the receiving plan must satisfy section 401(a)(9).
    (4) Revocation of section 242(b) election--(i) In general. A 
section 242(b)(2) election may be revoked after the required beginning 
date under section 401(a)(9)(C). However, if the section 242(b)(2) 
election is revoked after the required beginning date, and the total 
amount of the distributions that would have been required prior to the 
date of the revocation in order to satisfy section 401(a)(9), but for 
the section 242(b)(2) election, have not been made, then--
    (A) The catch-up distribution described in paragraph (h)(4)(ii) of 
this section must be made by the end of the calendar year following the 
calendar year in which the revocation occurs; and
    (B) Distributions must continue in accordance with section 
401(a)(9).
    (ii) Catch-up distribution. The catch-up distribution must be equal 
to the total amount not yet distributed that would have been required 
to be distributed to satisfy the requirements of section 401(a)(9).

0
Par. 4. Amend Sec.  1.401(a)(9)-9 as follows:
0
a. Amend the title by removing the phrase ``distribution period'' and 
adding in its place the phrase ``Uniform Lifetime'';
0
b. Amend paragraph (a) by removing the phrase ``applicable distribution 
period'' and adding in its place the phrase ``Uniform Lifetime'';
0
c. Amend paragraph (c) by removing the phrase ``distribution period'' 
and adding in its place the phrase ``applicable denominator'';
0
d. Revise the heading of the second column of Table 2 to paragraph (c) 
by removing the phrase ``Distribution period'' and adding in its place 
the phrase ``Applicable denominator''; and
0
e. Revise and republish paragraph (f)(2).
    The revisions and republications read as follows:


Sec.  1.401(a)(9)-9  Life expectancy and Uniform Lifetime tables.

* * * * *
    (f) * * *
    (2) Application to life expectancies that may not be recalculated--
(i) Redetermination of initial life expectancy using current tables. If 
an employee died before January 1, 2022, and, under the rules of Sec.  
1.401(a)(9)-5, the applicable denominator for a calendar year following 
the calendar year of the employee's death is equal to a single life 
expectancy calculated as of the calendar year of the employee's death 
(or, if applicable, the following calendar year), reduced by 1 for each 
subsequent year, then that life expectancy is reset as provided in 
paragraph (f)(2)(ii) of this section. Similarly, if an employee's sole 
beneficiary is the employee's surviving spouse, and the spouse dies 
before January 1, 2022, then the spouse's life expectancy for the 
calendar year of the spouse's death (which is used to determine the 
applicable denominator for later years) is reset as provided in 
paragraph (f)(2)(ii) of this section.
    (ii) Determination of applicable denominator--(A) Applicable 
denominator based on new life expectancy. With respect to a life 
expectancy described in paragraph (f)(2)(i) of this section, the 
applicable denominator for a distribution calendar year beginning on or 
after January 1, 2022, is determined by using the Single Life Table in 
paragraph (b) of this section to determine the initial life expectancy 
for the age of the relevant individual in the relevant calendar year 
and then reducing the resulting applicable denominator by 1 for each 
subsequent year.
    (B) Example of redetermination. Assume that an employee died at age 
80 in 2019 and the employee's designated beneficiary (who was not the 
employee's spouse) was age 75 in the year of the employee's death. For 
2020,

[[Page 58939]]

the denominator that would have applied for the beneficiary was 12.7 
years (the life expectancy for a 76-year-old under the Single Life 
Table in formerly applicable Sec.  1.401(a)(9)-9), and for 2021, it 
would have been 11.7 years (the original life expectancy, reduced by 1 
year). For 2022, if the designated beneficiary is still alive, then the 
applicable denominator would be 12.1 years (the 14.1-year life 
expectancy for a 76-year-old under the Single Life Table in paragraph 
(b) of this section, reduced by 2 years).

0
Par. 5. Revise and republish Sec.  1.402(c)-2 to read as follows:


Sec.  1.402(c)-2  Eligible rollover distributions.

    (a) Overview of rollover and related statutory provisions--(1) 
General rule--(i) Rollover of distribution paid to employee. Under 
section 402(c), any portion of a distribution paid to an employee from 
a qualified plan that is an eligible rollover distribution described in 
section 402(c)(4) may be rolled over to an eligible retirement plan 
described in section 402(c)(8)(B). See paragraph (j) of this section 
for rules relating to distributions paid to a surviving spouse or a 
non-spousal beneficiary.
    (ii) Exclusion from income. Except as otherwise provided in this 
section, if an eligible rollover distribution is paid to an employee, 
then the amount distributed is not currently includible in gross 
income, provided that it is contributed to an eligible retirement plan 
no later than the 60th day following the day on which the employee 
received the distribution. However, if all or any portion of the amount 
distributed (including any amount withheld as income tax under section 
3405(c)) is not contributed as a rollover, it is included in the 
employee's gross income to the extent required under section 402(a), 
and also may be subject to the 10-percent additional income tax under 
section 72(t).
    (iii) Definition of eligible retirement plan--(A) In general. An 
eligible retirement plan means an IRA described in paragraph 
(a)(1)(iii)(B)(1) of this section or a qualified plan described in 
paragraph (a)(1)(iii)(B)(2) of this section. In addition, an eligible 
deferred compensation plan described in section 457(b) that is 
maintained by an employer described in section 457(e)(1)(A) is treated 
as an eligible retirement plan, but only if the plan separately 
accounts for the amount of the rollover.
    (B) Definitions of IRA and qualified plan. For purposes of section 
402(c) and this section--
    (1) An IRA is an individual retirement account described in section 
408(a) or an individual retirement annuity (other than an endowment 
contract) described in section 408(b); and
    (2) A qualified plan is an employees' trust described in section 
401(a) that is exempt from tax under section 501(a), an annuity plan 
described in section 403(a), or an annuity contract described in 
section 403(b).
    (iv) Multiple distributions. If more than one distribution is 
received by an employee from a qualified plan during a taxable year, 
the 60-day deadline applies separately to each distribution. Because 
the amount withheld as income tax under section 3405(c) is considered 
an amount distributed under section 402(c), an amount equal to all or 
any portion of the amount withheld may be contributed as a rollover to 
an eligible retirement plan within the 60-day period in addition to the 
net amount of the eligible rollover distribution actually received by 
the employee.
    (v) Definition of rollover. For purposes of section 402(c) and this 
section, a rollover is--
    (A) A direct rollover as described in Sec.  1.401(a)(31)-1, Q&A-3;
    (B) A contribution of an eligible rollover distribution to an 
eligible retirement plan that, except as provided in paragraph (b)(2) 
of this section, satisfies the time period requirement in paragraph 
(a)(1)(ii) of this section and the designation requirement described in 
paragraph (k)(1) of this section; or
    (C) A repayment of a distribution that is treated as a rollover, as 
described in paragraph (a)(1)(vi) of this section.
    (vi) Certain repayments treated as rollovers. The repayment of a 
distribution is treated as a rollover if that treatment is prescribed 
under another statutory provision. For example, the repayment of a 
qualified disaster recovery distribution under section 72(t)(11)(C) is 
treated as a rollover for purposes of this section.
    (2) Related Internal Revenue Code provisions--(i) Direct rollover 
option. Section 401(a)(31) requires qualified plans to provide a 
distributee of an eligible rollover distribution the option to elect to 
have the distribution paid directly to an eligible retirement plan in a 
direct rollover. See Sec.  1.401(a)(31)-1 for further guidance 
concerning this direct rollover option.
    (ii) Notice requirement. Section 402(f) requires the plan 
administrator of a qualified plan to provide, within a reasonable time 
before making an eligible rollover distribution, a written explanation 
to the distributee of the distributee's right to elect a direct 
rollover and the withholding consequences of not making that election. 
The explanation also is required to provide certain other relevant 
information relating to the taxation of distributions. See Sec.  
1.402(f)-1 for guidance concerning the written explanation required 
under section 402(f).
    (iii) Mandatory income tax withholding. If a distributee of an 
eligible rollover distribution does not elect to have the eligible 
rollover distribution paid directly from the plan to an eligible 
retirement plan in a direct rollover under section 401(a)(31), the 
eligible rollover distribution is subject to mandatory income tax 
withholding under section 3405(c). See Sec.  31.3405(c)-1 of this 
chapter for provisions relating to the withholding requirements 
applicable to eligible rollover distributions.
    (iv) Section 403(b) annuities. See Sec.  1.403(b)-7(b) for guidance 
concerning the direct rollover requirements for distributions from 
annuities described in section 403(b).
    (3) Applicability date--(i) In general. The rules provided in this 
section apply to any distribution made on or after January 1, 2025.
    (ii) Distributions prior to January 1, 2025. For any distribution 
made before January 1, 2025, the rules of 26 CFR 1.402(c)-2 and 26 CFR 
1.402(c)-3 (as they appeared in the April 1, 2023, edition of 26 CFR 
part 1) apply. Alternatively, the rules provided in this section may be 
applied to those distributions.
    (b) Special rules--(1) Rules related to Roth accounts--(i) 
Treatment of Roth conversions. If all or any portion of an eligible 
rollover distribution that is rolled over to a Roth IRA is not from a 
designated Roth account described in section 402A, then the amount 
rolled over to the Roth IRA is included in the employee's gross income 
to the extent required under section 402(a). However, the amount rolled 
over to a Roth IRA generally is not subject to the 10-percent 
additional income tax under section 72(t).
    (ii) Treatment of distributions from designated Roth accounts. A 
distribution from a designated Roth account may be rolled over only to 
another designated Roth account or to a Roth IRA. See Sec.  1.402A-1, 
Q&A-5 for rules that apply to such a rollover.
    (2) Extensions of and exceptions to 60-day deadline--(i) Waiver of 
60-day deadline. The Commissioner may waive the 60-day deadline 
described in paragraph (a)(1)(ii) of this section if the failure to 
waive that requirement would be against equity or good conscience, 
including casualty, disaster, or other

[[Page 58940]]

events beyond the reasonable control of the individual with respect to 
such requirement. See section 402(c)(3)(B).
    (ii) Frozen deposits. The 60-day period described in paragraph 
(a)(1)(ii) of this section does not include any period during which the 
amount transferred to the employee is a frozen deposit described in 
section 402(c)(7)(B). The 60-day period also does not end earlier than 
10 days after that amount ceases to be a frozen deposit.
    (iii) Exception for qualified plan loan offsets. See paragraph (g) 
of this section for the timing requirements related to the rollover of 
a qualified plan loan offset amount.
    (iv) Other distributions treated as rollovers. In the case of a 
repayment of a distribution treated as a rollover as described in 
paragraph (a)(1)(vi) of this section, see the applicable statutory 
provision and accompanying regulations, if any, for the timing 
requirements relating to the repayment.
    (3) Special rules for distribution that includes basis--(i) 
Rollover of basis to IRA. If an eligible rollover distribution includes 
some or all of an employee's basis (that is, the employee's investment 
in the contract), then the portion of the distribution that is 
allocable to the employee's basis may be rolled over to an IRA.
    (ii) Rollover of basis to qualified trust must be done through 
direct trustee-to-trustee transfer. If an eligible rollover 
distribution includes some or all of an employee's basis, then the 
portion of an eligible rollover distribution that is allocable to the 
employee's basis may be rolled over to a qualified plan only through a 
direct trustee-to-trustee transfer. In that case, the qualified trust 
or annuity contract must provide for separate accounting of the amount 
transferred (and earnings on that amount) including separately 
accounting for the portion of the distribution that includes an 
employee's basis and the portion of the distribution that does not 
include basis.
    (iii) Rollover of basis to section 457(b) plans not permitted. The 
portion of an eligible rollover distribution that is allocable to an 
employee's basis may not be rolled over to an eligible deferred 
compensation plan described in section 457(b).
    (iv) Rollover of portion of distribution. If an eligible rollover 
distribution includes some or all of an employee's basis and less than 
the entire distribution is being rolled over, then the amount rolled 
over is treated as consisting first of the portion of the distribution 
that is not allocable to the employee's basis.
    (4) Special rules for distributions that include property--(i) In 
general. Except as provided in paragraph (b)(4)(ii) of this section, if 
an eligible rollover distribution consists of property other than 
money, then, only that property may be rolled over to an eligible 
retirement plan.
    (ii) Rollover of proceeds permitted. In the case of an eligible 
rollover distribution that consists of property other than money, the 
proceeds of the sale of that property may be rolled over to an eligible 
retirement plan. However, to the extent those proceeds exceed the 
property's fair market value at the time of the sale, that excess may 
not be rolled over. See section 402(c)(6)(C) and (D) for other rules 
relating to the sale of distributed property.
    (c) Definition of eligible rollover distribution--(1) General rule. 
Unless specifically excluded, an eligible rollover distribution means 
any distribution to an employee of all or any portion of the balance to 
the credit of the employee in a qualified plan. Thus, except as 
specifically provided in paragraph (c)(2) or (3) of this section, any 
amount distributed to an employee from a qualified plan is an eligible 
rollover distribution, regardless of whether it is a distribution of a 
benefit that is protected under section 411(d)(6).
    (2) Exceptions. An eligible rollover distribution does not include 
the following:
    (i) Any distribution that is one of a series of substantially equal 
periodic payments made (not less frequently than annually) over any one 
of the following periods--
    (A) The life of the employee (or the joint lives of the employee 
and the employee's designated beneficiary);
    (B) The life expectancy of the employee (or the joint life and last 
survivor expectancy of the employee and the employee's designated 
beneficiary); or
    (C) A specified period of ten years or more;
    (ii) Any distribution to the extent the distribution is a required 
minimum distribution under section 401(a)(9); or
    (iii) Any distribution that is made on account of hardship.
    (3) Other amounts not treated as eligible rollover distributions. 
The following amounts are not treated as eligible rollover 
distributions:
    (i) Elective deferrals (as defined in section 402(g)(3)) and 
employee contributions that, pursuant to rules prescribed by the 
Commissioner in revenue rulings, notices, or other guidance published 
in the Internal Revenue Bulletin (see Sec.  601.601(d) of this 
chapter), are returned to the employee (together with the income 
allocable thereto) in order to comply with the section 415 limitations;
    (ii) Corrective distributions of excess deferrals as described in 
Sec.  1.402(g)-1(e)(3), together with the income allocable to these 
corrective distributions;
    (iii) Corrective distributions of excess contributions under a 
qualified cash or deferred arrangement described in Sec.  1.401(k)-
2(b)(2) and excess aggregate contributions described in Sec.  1.401(m)-
2(b)(2), together with the income allocable to these distributions;
    (iv) Loans that are treated as deemed distributions pursuant to 
section 72(p);
    (v) Subject to the rules of paragraph (c)(4) of this section, 
dividends paid on employer securities as described in section 404(k);
    (vi) The costs of life insurance coverage includible in the 
employee's income under section 72(m)(3)(B);
    (vii) Prohibited allocations that are treated as deemed 
distributions pursuant to section 409(p);
    (viii) Distributions that are permissible withdrawals from an 
eligible automatic contribution arrangement within the meaning of 
section 414(w);
    (ix) Distributions of premiums for accident or health insurance 
under Sec.  1.402(a)-1(e)(1)(i) (other than distributions subject to 
section 402(l), as described in Sec.  1.402(a)-1(e)(3));
    (x) Amounts treated as distributed as a result of the purchase of a 
collectible pursuant to section 408(m); and
    (xi) Similar items designated by the Commissioner in revenue 
rulings, notices, and other guidance published in the Internal Revenue 
Bulletin. See Sec.  601.601(d) of this chapter.
    (4) Dividends reinvested in employer securities. Dividends paid to 
an employee stock ownership plan (as defined in section 4975(e)(7)) 
that are reinvested in employer securities pursuant to a participant 
election under section 404(k)(2)(A)(iii)(II) are included in the 
participant's account balance and lose their character as dividends 
when subsequently distributed from the account. As a result, these 
amounts are eligible rollover distributions if they otherwise meet the 
requirements of this paragraph (c).
    (d) Determination of substantially equal periodic payments--(1) 
General rule. For purposes of paragraph (c)(2)(i) of this section, and 
except as provided in this paragraph (d) or paragraph (e) of this 
section, whether a series of payments is a series of substantially 
equal periodic payments over a specified period is determined at the

[[Page 58941]]

time payments begin, and by following the principles of section 
72(t)(2)(A)(iv), without regard to contingencies or modifications that 
have not yet occurred. Thus, for example, a joint and 50-percent 
survivor annuity will be treated as a series of substantially equal 
periodic payments at the time payments commence, as will a joint and 
survivor annuity that provides for increased payments to the employee 
if the employee's beneficiary dies before the employee. Similarly, for 
purposes of determining if a disability benefit payment is part of a 
series of substantially equal periodic payments for a period described 
in section 402(c)(4)(A), any contingency under which payments cease 
upon recovery from the disability may be disregarded.
    (2) Certain supplements disregarded. For purposes of determining 
whether a distribution is one of a series of periodic payments that are 
substantially equal, social security supplements described in section 
411(a)(9) are disregarded. For example, if a distributee receives a 
life annuity of $500 per month, plus a social security supplement 
consisting of payments of $200 per month until the distributee reaches 
the age at which social security benefits of not less than $200 a month 
begin, the $200 supplemental payments are disregarded and, therefore, 
each monthly payment of $700 made before the social security age and 
each monthly payment of $500 made after the social security age is 
treated as one of a series of substantially equal periodic payments for 
life. A series of periodic payments that are not substantially equal 
solely because the amount of each payment is reduced upon attainment of 
social security retirement age (or, alternatively, upon commencement of 
social security early retirement, survivor, or disability benefits) is 
also treated as substantially equal as long as the reduction in the 
actual payments is level and does not exceed the applicable social 
security benefit.
    (3) Changes in the amount of payments or the distributee. If the 
amount (or, if applicable, the method of calculating the amount) of the 
payments changes so that subsequent payments are not substantially 
equal to prior payments, then a new determination must be made as to 
whether the remaining payments are a series of substantially equal 
periodic payments over a period specified in paragraph (c)(2)(i) of 
this section. This determination is made without taking into account 
payments made or the years of payment that elapsed prior to the change. 
However, a new determination is not made merely because, upon the death 
of the employee, the employee's beneficiary becomes the distributee. 
Thus, if distributions commence over a period that is at least as long 
as either the first annuitant's life or 10 years, then substantially 
equal payments to the survivor are not eligible rollover distributions 
even though the payment period remaining after the death of the 
employee is or may be less than the period described in section 
402(c)(4)(A). For example, substantially equal periodic payments made 
under a life annuity with a five-year term certain would not be an 
eligible rollover distribution even when paid after the death of the 
employee with three years remaining under the term certain.
    (4) Defined contribution plans. The following rules apply in 
determining whether a series of payments from a defined contribution 
plan constitutes a series of substantially equal periodic payments for 
a period described in section 402(c)(4)(A)--
    (i) Declining balance of years. A series of payments from an 
account balance under a defined contribution plan over a period is 
considered a series of substantially equal periodic payments over that 
period if, for each year, the amount of the distribution is calculated 
by dividing the account balance by the number of years remaining in the 
period. For example, a series of payments is considered substantially 
equal payments over 10 years if the series is determined as follows. In 
year 1, the annual payment is the account balance divided by 10; in 
year 2, the annual payment is the remaining account balance divided by 
9; and so on until year 10 when the entire remaining balance is 
distributed.
    (ii) Reasonable actuarial assumptions. If an employee's account 
balance under a defined contribution plan is to be distributed in 
annual installments of a specified amount until the account balance is 
exhausted, then, for purposes of determining if the period of 
distribution is a period described in section 402(c)(4)(A), the period 
of years over which the installments will be distributed must be 
determined using reasonable actuarial assumptions. For example, if an 
employee has an account balance of $100,000, the employee elects 
distributions of $12,000 per year until the account balance is 
exhausted, and the future rate of return is assumed to be 5 percent per 
year, the account balance will be exhausted in approximately 12 years. 
Similarly, if the same employee elects a fixed annual distribution 
amount and the fixed annual amount is less than or equal to $10,000, it 
is reasonable to assume that the future rate of return will be greater 
than 0 percent and, thus, the account will not be exhausted in less 
than 10 years.
    (e) Determination of whether a payment is an independent payment--
(1) Definition of independent payments. Except as provided in 
paragraphs (e)(2) and (3) of this section, a payment is treated as 
independent of the payments in a series of substantially equal 
payments, and thus not part of the series described in paragraph 
(c)(2)(i) of this section, if the payment is substantially larger or 
smaller than the other payments in the series. An independent payment 
is an eligible rollover distribution if it is not otherwise excepted 
from the definition of eligible rollover distribution. This rule 
applies regardless of whether the payment is made before, with, or 
after payments in the series. For example, if an employee elects a 
single payment of half of the account balance with the remainder of the 
account balance paid over the life expectancy of the distributee, the 
single payment is treated as independent of the payments in the series 
and is an eligible rollover distribution unless otherwise excepted. 
Similarly, if an employee's surviving spouse receives a survivor life 
annuity of $1,000 per month plus a single payment on account of death 
of $7,500, the single payment is treated as independent of the payments 
in the annuity and is an eligible rollover distribution unless 
otherwise excepted.
    (2) Special rules--(i) Administrative error or delay. If, due 
solely to reasonable administrative error or delay in payment, there is 
an adjustment after the annuity starting date to the amount of any 
payment in a series of payments that otherwise would constitute a 
series of substantially equal payments described in section 
402(c)(4)(A) and this section, the adjusted payment or payments are 
treated as part of the series of substantially equal periodic payments 
and are not treated as independent of the payments in the series. For 
example, if, due solely to reasonable administrative delay, the first 
payment of a life annuity is delayed by two months and reflects an 
additional two months' worth of benefits, that payment is treated as a 
substantially equal payment in the series rather than as an independent 
payment. The result does not change merely because the amount of the 
adjustment is paid in a separate supplemental payment.
    (ii) Supplemental payments for annuitants. A supplemental payment 
from a defined benefit plan to an annuitant (that is, a retiree or 
beneficiary) is treated as part of a series

[[Page 58942]]

of substantially equal payments, rather than as an independent payment, 
provided that the following conditions are met--
    (A) The supplement is a benefit increase for annuitants;
    (B) The amount of the supplement is determined in a consistent 
manner for all similarly situated annuitants;
    (C) The supplement is paid to annuitants who are otherwise 
receiving payments that would constitute substantially equal periodic 
payments; and
    (D) The aggregate supplement is less than or equal to the greater 
of 10 percent of the annual rate of payment for the annuity, or $750.
    (iii) Final payment in a series. If a payment in a series of 
periodic payments from an account balance under a defined contribution 
plan is equal to the remaining balance in the account and is 
substantially less than the other payments in the series, the final 
payment must nevertheless be treated as a payment in the series of 
substantially equal periodic payments and may not be treated as an 
independent payment if the other payments in the series are 
substantially equal and the payments are for a period described in 
section 402(c)(4)(A) based on the rules provided in paragraph 
(d)(4)(ii) of this section. Thus, the final payment will not be an 
eligible rollover distribution.
    (3) Additional guidance. The Commissioner, in revenue rulings, 
notices, and other guidance published in the Internal Revenue Bulletin, 
may provide additional rules for determining what is an independent 
payment under paragraph (e)(1) of this section and may prescribe a 
higher amount than the $750 amount in paragraph (e)(2)(ii)(D) of this 
section. See Sec.  601.601(d) of this chapter.
    (f) Determination of whether a distribution is a required minimum 
distribution--(1) Determination for calendar year of distribution. 
Except as provided in paragraphs (f)(2) and (3) of this section, if a 
minimum distribution is required for a calendar year, then the amounts 
distributed during that calendar year are treated as required minimum 
distributions under section 401(a)(9) to the extent that the total 
minimum distribution required under section 401(a)(9) for the calendar 
year has not been satisfied (and accordingly, those amounts are not 
eligible rollover distributions). For example, if an employee is 
required under section 401(a)(9) to receive a minimum distribution for 
a calendar year of $5,000 and the employee receives a total of $7,200 
in that year, the first $5,000 distributed will be treated as the 
required minimum distribution and will not be an eligible rollover 
distribution, and the remaining $2,200 will be an eligible rollover 
distribution if it otherwise qualifies. If the total section 401(a)(9) 
required minimum distribution for a calendar year prior to the calendar 
year of the distribution is not distributed in that calendar year (for 
example, when the distribution for the calendar year in which the 
employee reaches the applicable age is made on April 1 of the following 
calendar year), then the amount that was required to be distributed, 
but not distributed, is added to the amount required to be distributed 
for the next calendar year in determining the portion of any 
distribution in the next calendar year that is a required minimum 
distribution (and, thus, is not an eligible rollover distribution).
    (2) Distribution before first distribution calendar year. Any 
amount that is paid to an employee before January 1 of the first 
distribution calendar year for the employee (as described in Sec.  
1.401(a)(9)-5(a)(2)(ii)) is not treated as required under section 
401(a)(9) and, thus, is an eligible rollover distribution if it 
otherwise qualifies.
    (3) Special rule for annuities. In the case of annuity payments 
from a defined benefit plan, or under an annuity contract purchased 
from an insurance company (including a qualified plan distributed 
annuity contract (as defined in paragraph (h) of this section)), the 
entire amount of any annuity payment made on or after January 1 of the 
first distribution calendar year for the employee (as described in 
Sec.  1.401(a)(9)-5(a)(2)(ii)) is treated as an amount required under 
section 401(a)(9) and, thus, is not an eligible rollover distribution.
    (g) Treatment of plan loan offset amounts--(1) General rule. A 
distribution of a plan loan offset amount, as defined in paragraph 
(g)(3)(i) of this section (including a qualified plan loan offset 
amount, a type of plan loan offset amount defined in paragraph 
(g)(3)(ii) of this section), is an eligible rollover distribution if it 
is described in paragraph (c) of this section. See Sec.  1.401(a)(31)-
1, Q&A-16, for guidance concerning the offering of a direct rollover of 
a plan loan offset amount. See also Sec.  31.3405(c)-1, Q&A-11, of this 
chapter for guidance concerning special withholding rules with respect 
to plan loan offset amounts.
    (2) Rollover period for a plan loan offset amount--(i) Plan loan 
offset amount that is not a qualified plan loan offset amount. A 
distribution of a plan loan offset amount that is an eligible rollover 
distribution and that is not a qualified plan loan offset amount may be 
rolled over by the employee to an eligible retirement plan within the 
60-day period set forth in section 402(c)(3)(A), as described in 
paragraph (a)(1)(ii) of this section.
    (ii) Plan loan offset amount that is a qualified plan loan offset 
amount. A distribution of a plan loan offset amount that is an eligible 
rollover distribution and that is a qualified plan loan offset amount 
may be rolled over by the employee to an eligible retirement plan 
within the period set forth in section 402(c)(3)(C), which is the 
individual's tax filing due date (including extensions) for the taxable 
year in which the offset is treated as distributed from a qualified 
employer plan.
    (3) Definitions--(i) Plan loan offset amount. For purposes of 
section 402(c), a plan loan offset amount is the amount by which, under 
the plan terms governing a plan loan, an employee's accrued benefit is 
reduced (offset) in order to repay the loan (including the enforcement 
of the plan's security interest in an employee's accrued benefit). A 
distribution of a plan loan offset amount can occur in a variety of 
circumstances, for example, when the terms governing a plan loan 
require that, in the event of the employee's termination of employment 
or request for a distribution, the loan be repaid immediately or 
treated as in default. A distribution of a plan loan offset amount also 
occurs when, under the terms governing the plan loan, the loan is 
cancelled, accelerated, or treated as if it were in default (for 
example, when the plan treats a loan as in default upon an employee's 
termination of employment or within a specified period thereafter). A 
distribution of a plan loan offset amount is an actual distribution, 
not a deemed distribution under section 72(p).
    (ii) Qualified plan loan offset amount. For purposes of section 
402(c), a qualified plan loan offset amount is a plan loan offset 
amount that satisfies the following requirements:
    (A) The plan loan offset amount is treated as distributed from a 
qualified employer plan to an employee or beneficiary solely by reason 
of the termination of the qualified employer plan, or the failure to 
meet the repayment terms of the loan because of the severance from 
employment of the employee; and
    (B) The plan loan offset amount relates to a plan loan that met the 
requirements of section 72(p)(2) immediately prior to the termination 
of the qualified employer plan or the

[[Page 58943]]

severance from employment of the employee, as applicable.
    (iii) Qualified employer plan. For purposes of section 402(c) and 
this section, a qualified employer plan is a qualified employer plan as 
defined in section 72(p)(4).
    (4) Special rules for qualified plan loan offset amounts--(i) 
Definition of severance from employment. For purposes of paragraph 
(g)(3)(ii)(A) of this section, whether an employee has a severance from 
employment with the employer that maintains the qualified employer plan 
is determined in the same manner as under Sec.  1.401(k)-1(d)(2). Thus, 
an employee has a severance from employment when the employee ceases to 
be an employee of the employer maintaining the plan.
    (ii) Offset because of severance from employment. A plan loan 
offset amount is treated as distributed from a qualified employer plan 
to an employee or beneficiary solely by reason of the failure to meet 
the repayment terms of a plan loan because of severance from employment 
of the employee if the plan loan offset:
    (A) Relates to a failure to meet the repayment terms of the plan 
loan, and
    (B) Occurs within the period beginning on the date of the 
employee's severance from employment and ending on the first 
anniversary of that date.
    (5) Examples. The following examples illustrate the rules with 
respect to plan loan offset amounts, including qualified plan loan 
offset amounts, in this paragraph (g) and in Sec. Sec.  1.401(a)(31)-1, 
Q&A-16, and 31.3405(c)-1, Q&A-11, of this chapter. For purposes of 
these examples, each reference to a plan refers to a qualified employer 
plan as described in section 72(p)(4).
    (i) Example 1--(A) In 2025, Employee A has an account balance of 
$10,000 in Plan Y, of which $3,000 is invested in a plan loan to 
Employee A that is secured by Employee A's account balance in Plan Y. 
Employee A has made no after-tax employee contributions to Plan Y. The 
plan loan meets the requirements of section 72(p)(2). Plan Y does not 
provide any direct rollover option with respect to plan loans. Employee 
A severs from employment on June 15, 2025. After severance from 
employment, Plan Y accelerates the plan loan and provides Employee A 90 
days to repay the remaining balance of the plan loan. Employee A, who 
is under the age set forth in section 401(a)(9)(C)(i)(I), does not 
repay the loan within the 90 days and instead elects a direct rollover 
of Employee A's entire account balance in Plan Y. On September 18, 2025 
(within the 12-month period beginning on the date that Employee A 
severed from employment), Employee A's outstanding loan is offset 
against the account balance.
    (B) In order to satisfy section 401(a)(31), Plan Y must make a 
direct rollover by paying $7,000 directly to the eligible retirement 
plan chosen by Employee A. When Employee A's account balance was offset 
by the amount of the $3,000 unpaid loan balance, Employee A received a 
plan loan offset amount (equivalent to $3,000) that is an eligible 
rollover distribution. However, under Sec.  1.401(a)(31)-1, Q&A-16, 
Plan Y satisfies section 401(a)(31), even though a direct rollover 
option was not provided with respect to the $3,000 plan loan offset 
amount.
    (C) No withholding is required under section 3405(c) on account of 
the distribution of the $3,000 plan loan offset amount because no cash 
or other property (other than the plan loan offset amount) is received 
by Employee A from which to satisfy the withholding.
    (D) The $3,000 plan loan offset amount is a qualified plan loan 
offset amount within the meaning of paragraph (g)(3)(ii) of this 
section. Accordingly, Employee A may roll over up to the $3,000 
qualified plan loan offset amount to an eligible retirement plan within 
the period that ends on the employee's tax filing due date (including 
extensions) for the taxable year in which the offset occurs.
    (ii) Example 2--(A) The facts are the same as in paragraph 
(g)(5)(i) of this section (Example 1), except that, rather than 
accelerating the plan loan, Plan Y permits Employee A to continue 
making loan installment payments after severance from employment. 
Employee A continues making loan installment payments until January 1, 
2026, at which time Employee A does not make the loan installment 
payment due on January 1, 2026. In accordance with Sec.  1.72(p)-1, 
Q&A-10, Plan Y allows a cure period that continues until the last day 
of the calendar quarter following the quarter in which the required 
installment payment was due. Employee A does not make a plan loan 
installment payment during the cure period. Plan Y offsets the unpaid 
$3,000 loan balance against Employee A's account balance on July 1, 
2026 (which is after the 12-month period beginning on the date that 
Employee A severed from employment).
    (B) The conclusion is the same as in paragraph (g)(5)(i) of this 
section (Example 1), except that the $3,000 plan loan offset amount is 
not a qualified plan loan offset amount (because the offset did not 
occur within the 12-month period beginning on the date that Employee A 
severed from employment). Accordingly, Employee A may roll over up to 
the $3,000 plan loan offset amount to an eligible retirement plan 
within the 60-day period provided in section 402(c)(3)(A) (rather than 
within the period that ends on Employee A's tax filing due date 
(including extensions) for the taxable year in which the offset 
occurs).
    (iii) Example 3--(A) The facts are the same as in paragraph 
(g)(5)(i) of this section (Example 1), except that the terms governing 
the plan loan to Employee A provide that, upon severance from 
employment, Employee A's account balance is automatically offset by the 
amount of any unpaid loan balance to repay the loan. Employee A severs 
from employment but does not request a distribution from Plan Y. 
Nevertheless, pursuant to the terms governing the plan loan, Employee 
A's account balance is automatically offset on June 15, 2025, by the 
amount of the $3,000 unpaid loan balance.
    (B) The $3,000 plan loan offset amount is a qualified plan loan 
offset amount within the meaning of paragraph (g)(3)(ii) of this 
section. Accordingly, Employee A may roll over up to the $3,000 
qualified plan loan offset amount to an eligible retirement plan within 
the period that ends on Employee A's tax filing due date (including 
extensions) for the taxable year in which the offset occurs.
    (iv) Example 4--(A) The facts are the same as in paragraph 
(g)(5)(i) of this section (Example 1), except that Employee A elects to 
receive a cash distribution of the account balance that remains after 
the $3,000 plan loan offset amount, instead of electing a direct 
rollover of the remaining account balance.
    (B) The amount of the distribution received by Employee A is 
$10,000 ($3,000 relating to the plan loan offset and $7,000 relating to 
the cash distribution). Because the amount of the $3,000 plan loan 
offset amount attributable to the loan is included in determining the 
amount of the eligible rollover distribution to which withholding 
applies, withholding in the amount of $2,000 (20 percent of $10,000) is 
required under section 3405(c). The $2,000 is required to be withheld 
from the $7,000 to be distributed to Employee A in cash, so that 
Employee A actually receives a cash amount of $5,000.
    (C) The $3,000 plan loan offset amount is a qualified plan loan 
offset amount within the meaning of paragraph (g)(3)(ii) of this 
section. Accordingly, Employee A may roll over up to the $3,000 
qualified plan loan

[[Page 58944]]

offset to an eligible retirement plan within the period that ends on 
Employee A's tax filing due date (including extensions) for the taxable 
year in which the offset occurs. In addition, Employee A may roll over 
up to $7,000 (the portion of the distribution that is not related to 
the offset) within the 60-day period provided in section 402(c)(3).
    (v) Example 5--(A) The facts are the same as in paragraph 
(g)(5)(iv) of this section (Example 4), except that the $7,000 
distribution to Employee A after the offset consists solely of employer 
securities within the meaning of section 402(e)(4)(E).
    (B) No withholding is required under section 3405(c) because the 
distribution consists solely of the $3,000 plan loan offset amount and 
the $7,000 distribution of employer securities. This is the result 
because the total amount required to be withheld does not exceed the 
sum of the cash and the fair market value of other property 
distributed, excluding plan loan offset amounts and employer 
securities.
    (C) Employee A may roll over up to the $7,000 of employer 
securities to an eligible retirement plan within the 60-day period 
provided in section 402(c)(3). The $3,000 plan loan offset amount is a 
qualified plan loan offset amount within the meaning of paragraph 
(g)(3)(ii) of this section. Accordingly, Employee A may roll over up to 
the $3,000 qualified plan loan offset amount to an eligible retirement 
plan within the period that ends on Employee A's tax filing due date 
(including extensions) for the taxable year in which the offset occurs.
    (vi) Example 6--(A) Employee B, who is age 40, has an account 
balance in Plan Z. Plan Z does not provide for after-tax employee 
contributions. In 2025, Employee B receives a loan from Plan Z, the 
terms of which satisfy section 72(p)(2). The loan is secured by 
elective contributions subject to the distribution restrictions in 
section 401(k)(2)(B).
    (B) Employee B fails to make an installment payment due on April 1, 
2026, or any other monthly payments thereafter. In accordance with 
Sec.  1.72(p)-1, Q&A-10, Plan Z allows a cure period that continues 
until the last day of the calendar quarter following the quarter in 
which the required installment payment was due (September 30, 2026). 
Employee B does not make a plan loan installment payment during the 
cure period. On September 30, 2026, pursuant to section 72(p)(1), 
Employee B is taxed on a deemed distribution equal to the amount of the 
unpaid loan balance. Pursuant to paragraph (c)(3)(iv) of this section, 
the deemed distribution is not an eligible rollover distribution.
    (C) Because Employee B has not severed from employment or 
experienced any other event that permits the distribution under section 
401(k)(2)(B) of the elective contributions that secure the loan, Plan Z 
is prohibited from executing on the loan. Accordingly, Employee B's 
account balance is not offset by the amount of the unpaid loan balance 
at the time of the deemed distribution. Thus, there is no distribution 
of an offset amount that is an eligible rollover distribution on 
September 30, 2026.
    (vii) Example 7--(A) The facts are the same as in paragraph 
(g)(5)(vi) of this section (Example 6), except that Employee B has a 
severance from employment on November 1, 2026. On that date, Employee 
B's unpaid loan balance is offset against the account balance on 
distribution.
    (B) The plan loan offset amount is not a qualified plan loan offset 
amount. Although the offset occurred within 12 months after Employee B 
severed from employment, the plan loan does not meet the requirement in 
paragraph (g)(3)(ii)(B) of this section (that the plan loan meet the 
requirements of section 72(p)(2) immediately prior to Employee B's 
severance from employment). Instead, the loan was taxable on September 
30, 2026 (prior to Employee B's severance from employment on November 
1, 2026), because of the failure to meet the level amortization 
requirement in section 72(p)(2)(C). Accordingly, Employee B may roll 
over the plan loan offset amount to an eligible retirement plan within 
the 60-day period provided in section 402(c)(3)(A) (rather than within 
the period that ends on Employee B's tax filing due date (including 
extensions) for the taxable year in which the offset occurs).
    (h) Qualified plan distributed annuity contract--(1) Definition of 
a qualified plan distributed annuity contract. A qualified plan 
distributed annuity contract is an annuity contract purchased for a 
participant, and distributed to the participant, by a qualified plan.
    (2) Treatment of amounts paid as eligible rollover distributions. 
Amounts paid under a qualified plan distributed annuity contract are 
payments of the balance to the credit of the employee for purposes of 
section 402(c) and are eligible rollover distributions if they 
otherwise qualify. Thus, for example, if the employee surrenders the 
contract for a single sum payment of its cash surrender value, the 
payment would be an eligible rollover distribution to the extent it is 
not a required minimum distribution under section 401(a)(9). This rule 
applies even if the annuity contract is distributed in connection with 
a plan termination. See Sec.  1.401(a)(31)-1, Q&A-17 and Sec.  
31.3405(c)-1, Q&A-13 of this chapter concerning the direct rollover 
requirements and 20-percent withholding requirements, respectively, 
that apply to eligible rollover distributions from such an annuity 
contract.
    (i) [Reserved]
    (j) Treatment of distributions to beneficiary--(1) Spousal 
distributee--(i) In general. Pursuant to section 402(c)(9), if any 
distribution attributable to an employee is paid to the employee's 
surviving spouse, section 402(c) applies to the distribution in the 
same manner as if the spouse were the employee. The same rule applies 
if any distribution attributable to an employee is paid in accordance 
with a qualified domestic relations order (as defined in section 
414(p)) (QDRO) to the employee's spouse or former spouse who is an 
alternate payee. Therefore, a distribution to the surviving spouse of 
an employee (or to a spouse or former spouse who is an alternate payee 
under a QDRO), including a distribution of ancillary death benefits 
attributable to the employee, is an eligible rollover distribution if 
it would be described in paragraph (c) of this section had it been paid 
to the employee. For this purpose, the amount excluded from the 
definition of eligible rollover distribution under paragraph (c)(2)(ii) 
of this section as a required minimum distribution is determined under 
the rules of paragraph (j)(3) of this section (or paragraph (j)(4) of 
this section, if applicable).
    (ii) Rollovers to qualified plans must be in capacity of employee. 
If a surviving spouse rolls over a distribution to a qualified plan 
described in paragraph (a)(1)(iii)(B)(2) of this section or to an 
eligible deferred compensation plan described in section 457(b) that is 
maintained by an employer described in section 457(e)(1)(A), then, with 
respect to the amount rolled over, that amount is treated as the 
spouse's own interest under the receiving plan and not the interest of 
the decedent under the distributing plan. Thus, for example, in 
determining the required minimum distribution from the receiving plan 
with respect to the amount rolled over, distributions must satisfy 
section 401(a)(9)(A) and not section 401(a)(9)(B).
    (2) Non-spousal distributee--(i) Eligibility for rollover. A 
distributee

[[Page 58945]]

other than the employee or the employee's surviving spouse (or a spouse 
or former spouse who is an alternate payee under a QDRO) is not 
permitted to roll over a distribution from a qualified plan. Therefore, 
a distribution to a non-spousal distributee does not constitute an 
eligible rollover distribution under section 402(c)(4).
    (ii) Direct transfer permitted. Although a non-spousal distributee 
may not roll over a distribution, pursuant to section 402(c)(11), if 
the distributee is a designated beneficiary (as determined under Sec.  
1.401(a)(9)-4) who is not described in paragraph (j)(1) of this section 
and the distribution would be an eligible rollover distribution had it 
been paid to the employee, then the distributee may elect that the 
distribution be made in the form of a direct trustee-to-trustee 
transfer to an IRA established for the purpose of receiving that 
distribution. If a direct trustee-to-trustee transfer is made pursuant 
to section 402(c)(11) then--
    (A) The transfer is treated as an eligible rollover distribution;
    (B) The IRA is an inherited IRA described in section 408(d)(3)(ii); 
and
    (C) Section 401(a)(9)(B) (other than section 401(a)(9)(B)(iv)) will 
apply to the IRA.
    (iii) Applicability to see-through trusts. If a distributee 
described in paragraph (j)(2)(ii) of this section is a see-through 
trust described in Sec.  1.401(a)(9)-4(f)(1)(i), then the beneficiaries 
of the trust that are treated as designated beneficiaries under Sec.  
1.401(a)(9)-4(f)(3) are also treated as designated beneficiaries for 
purposes of section 402(c)(11)(A).
    (iv) Applicability of withholding rules. An amount that could have 
been transferred to a beneficiary IRA in accordance with section 
402(c)(11), but instead, was paid directly to a non-spouse beneficiary, 
is treated as an eligible rollover distribution for purposes of section 
3405(c). Thus, 20-percent withholding under section 3405(c) applies to 
a distribution made directly to a non-spouse beneficiary.
    (3) Determination of amounts that constitute required minimum 
distributions for distributions to beneficiaries--(i) In general--(A) 
First portion of a distribution is treated as a required minimum 
distribution. If a minimum distribution is required to be made to a 
beneficiary in a calendar year, then the amounts distributed during 
that calendar year are treated as required minimum distributions under 
section 401(a)(9), to the extent that the total required minimum 
distribution under section 401(a)(9) for the calendar year has not been 
satisfied. Accordingly, those amounts are not eligible rollover 
distributions. If the employee dies before the employee's required 
beginning date (within the meaning of Sec.  1.401(a)(9)-2(b)), then no 
amount is a required minimum distribution for the year in which the 
employee dies.
    (B) Determination of required minimum distribution based on 
distribution method. Except as otherwise provided in paragraphs 
(j)(3)(ii) and (4) of this section, if an employee dies before the 
employee's required beginning date, then the amount that is not an 
eligible rollover distribution because it is a required minimum 
distribution for the calendar year is determined under paragraph 
(j)(3)(i)(C), (D), or (E) of this section, whichever applies to the 
beneficiary. See Sec.  1.401(a)(9)-3(b)(4) and (c)(5) to determine 
which rule applies. If an employee dies on or after the employee's 
required beginning date, then the amount that is not an eligible 
rollover distribution because it is a required minimum distribution for 
a calendar year is determined under paragraph (j)(3)(i)(F) of this 
section.
    (C) Five-year rule in the case of death before required beginning 
date. If the 5-year rule described in Sec.  1.401(a)(9)-3(b)(2) or 
(c)(2) applies to the beneficiary, then no amount is required to be 
distributed until the end of the calendar year that includes the fifth 
anniversary of the date of the employee's death. In that year, the 
entire amount to which the beneficiary is entitled under the plan must 
be distributed, and because it is a required minimum distribution, it 
is not an eligible rollover distribution. Thus, if the 5-year rule 
applies with respect to a designated beneficiary, then any distribution 
made before the calendar year that includes the fifth anniversary of 
the date of the employee's death is eligible for rollover if it 
otherwise meets the requirements of this section.
    (D) Ten-year rule in the case of death before required beginning 
date. If the 10-year rule described in Sec.  1.401(a)(9)-3(c)(3) 
applies to the beneficiary, then no amount is required to be 
distributed until the end of the calendar year that includes the tenth 
anniversary of the date of the employee's death. In that year, the 
entire amount to which the beneficiary is entitled under the plan must 
be distributed, and because it is treated as a required minimum 
distribution, it is not an eligible rollover distribution. Thus, if the 
10-year rule applies with respect to a designated beneficiary, then any 
distribution made before the calendar year that includes the tenth 
anniversary of the date of the employee's death is eligible for 
rollover if it otherwise meets the requirements of this section.
    (E) Life expectancy rule. If the life expectancy rule described in 
Sec.  1.401(a)(9)-3(c)(4) (or, in the case of a defined benefit plan, 
the annuity payment rule described in Sec.  1.401(a)(9)-3(b)(3)) 
applies to the designated beneficiary, then, in the first distribution 
calendar year for the beneficiary (as defined in Sec.  1.401(a)(9)-
5(a)(2)(iii)) and in each subsequent calendar year, the amount treated 
as a required minimum distribution and not eligible to be rolled over 
is determined in accordance in with Sec.  1.401(a)(9)-5(d) and (e) (or, 
in the case of a defined benefit plan, Sec.  1.401(a)(9)-6).
    (F) Employee dies on or after required beginning date. If the 
employee dies on or after the employee's required beginning date, then, 
in the calendar year of the employee's death, the amount treated as a 
required minimum distribution and not eligible to be rolled over is 
determined in accordance with Sec.  1.401(a)(9)-5(c) (or, in the case 
of a defined benefit plan, Sec.  1.401(a)(9)-6). For each subsequent 
calendar year, the amount treated as a required minimum distribution 
and not eligible to be rolled over is determined in accordance with 
Sec.  1.401(a)(9)-5(d) and (e) (or, in the case of a defined benefit 
plan, Sec.  1.401(a)(9)-6).
    (ii) Exception allowing beneficiary to change distribution method. 
If the 5-year rule or 10-year rule described in Sec.  1.401(a)(9)-
3(b)(2), (c)(2) or (c)(3) applies to a designated beneficiary under the 
plan, and the eligible designated beneficiary is using the exception 
under Sec.  1.408-8(d)(2)(ii) to switch to the use of the life 
expectancy rule under the IRA to which the distribution is rolled over 
or transferred, then the designated beneficiary must determine the 
portion of the distribution that is a required minimum distribution 
that is not eligible for rollover using the life expectancy rule 
described in Sec.  1.401(a)(9)-3(c)(4) (or, in the case of a defined 
benefit plan, the annuity payment rule described in Sec.  1.401(a)(9)-
3(b)(3)).
    (4) Special rule applicable to a spouse beneficiary--(i) In 
general. This paragraph (j)(4) provides a special rule relating to the 
determination of amounts treated as a required minimum distribution for 
distributions to an employee's surviving spouse to whom the 10-year 
rule described in Sec.  1.401(a)(9)-3(c)(3) applies. This rule, which 
treats a portion of a distribution made before the last year of the 10-
year period as a required minimum distribution, applies if--

[[Page 58946]]

    (A) The distribution is made in or after the calendar year the 
surviving spouse attains the applicable age described in Sec.  
1.401(a)(9)-2(b)(2); and
    (B) The surviving spouse rolls over a portion of that distribution 
to an eligible retirement plan under which the surviving spouse is not 
treated as the beneficiary of the employee.
    (ii) Catch-up of missed required minimum distributions. If this 
paragraph (j)(4) applies to a distribution then, notwithstanding 
paragraph (j)(3)(i)(D) of this section, the portion of the distribution 
that is treated as a required minimum distribution, and thus is not an 
eligible rollover distribution, is the excess (if any) of--
    (A) The sum of the hypothetical required minimum distributions 
determined under paragraph (j)(4)(iii) of this section for each year 
during the catch-up period with respect to that distribution 
(determined under paragraph (j)(4)(v) of this section), over
    (B) The actual distributions made to the surviving spouse during 
those calendar years (other than the calendar year in which that 
distribution is made).
    (iii) Calculation of hypothetical required minimum distributions 
for the catch-up period. This paragraph (j)(4)(iii) provides rules for 
determining the calculation of the hypothetical required minimum 
distribution for each calendar year during the catch-up period with 
respect to a distribution (determination year). The hypothetical 
required minimum distribution for a determination year is the amount 
that would have been the required minimum distribution for that year 
had the election under Sec.  1.401(a)(9)-5(g)(3)(i) been in effect for 
the spouse. Thus, the hypothetical required minimum distribution is 
calculated using the applicable denominator determined under Sec.  
1.401(a)(9)-5(g)(3). However, in lieu of the account balance that would 
otherwise be used to determine the required minimum distribution for 
the determination year, an adjusted account balance is used for this 
purpose. The adjusted account balance for a determination year is 
calculated by reducing the account balance that would otherwise be used 
to determine the required minimum distribution for the calendar year in 
which the distribution is made by the excess (if any) of--
    (A) The sum of the hypothetical required minimum distributions 
determined under this paragraph (j)(4)(iii) beginning with the first 
applicable year and ending with the calendar year preceding the 
determination year; over
    (B) The actual distributions made to the surviving spouse during 
those calendar years.
    (iv) Definition of first applicable year. The first applicable year 
is the later of--
    (A) The calendar year in which the surviving spouse attains the 
applicable age, and
    (B) The calendar year in which the employee would have attained the 
applicable age.
    (v) Definition of catch-up period. The catch-up period with respect 
to a distribution is the period that--
    (A) Begins with first applicable year, and
    (B) Ends in the calendar year in which the distribution is made.
    (vi) Reasonable assumptions by plan administrator. For purposes of 
section 402(f)(2)(A), a plan administrator is permitted to assume that 
a surviving spouse to whom this paragraph (j)(4) applies will roll over 
(to the extent permitted under the rules of this paragraph (j)(4)) the 
entire distribution to an eligible retirement plan under which that 
spouse is not treated as the beneficiary of the employee. Thus, a plan 
administrator may assume that the catch-up of missed required minimum 
distributions described in paragraph (j)(4)(ii) of this section applies 
to the distribution and treat only the remaining portion of the 
distribution as an eligible rollover distribution for purposes of 
sections 401(a)(31) and 3405(c). See paragraph (k)(2) of this section 
concerning the effect of this assumption for purposes of section 
402(c).
    (vii) [Reserved]
    (k) Other rules--(1) Designation must be irrevocable--(i) Indirect 
rollover. In order for a contribution of an eligible rollover 
distribution to an individual retirement plan to constitute a rollover 
and, thus, to qualify for exclusion from gross income under section 
402(c), a distributee must elect, at the time the contribution is made, 
to treat the contribution as a rollover contribution. An election is 
made by designating to the trustee, issuer, or custodian of the 
eligible retirement plan that the contribution is a rollover 
contribution. This election is irrevocable. Once any portion of an 
eligible rollover distribution has been contributed to an individual 
retirement plan and designated as a rollover distribution, taxation of 
the withdrawal of the contribution from the individual retirement plan 
is determined under section 408(d) rather than under section 402 or 
403. Therefore, the eligible rollover distribution is not eligible for 
capital gains treatment, five-year or ten-year averaging, or the 
exclusion from gross income for net unrealized appreciation on employer 
stock.
    (ii) Direct rollover. If an eligible rollover distribution is paid 
to an eligible retirement plan in a direct rollover at the election of 
the distributee, the distributee is deemed to have irrevocably 
designated that the direct rollover is a rollover contribution.
    (2) Use of actual minimum required distribution calculation. The 
portion of any distribution that an employee (or spousal distributee) 
may roll over as an eligible rollover distribution under section 402(c) 
is determined based on the actual application of section 402 and other 
relevant provisions of the Internal Revenue Code. The actual 
application of these provisions may produce different results than any 
assumption described in paragraph (j)(4)(vi) of this section or Sec.  
1.401(a)(31)-1, Q&A-18, that is used by the plan administrator. Thus, 
for example, if the plan administrator assumes there is no designated 
beneficiary and calculates the portion of a distribution that is a 
required minimum distribution using the Uniform Lifetime Table under 
Sec.  1.401(a)(9)-9(c), but the portion of the distribution that is 
actually a required minimum distribution and thus not an eligible 
rollover distribution is determined by taking into account a spousal 
designated beneficiary who is more than 10 years younger than the 
employee, then a greater portion of the distribution is actually an 
eligible rollover distribution and the distributee may roll over the 
additional amount.
    (3) Plan rollover not counted towards one rollover per year 
limitation. A distribution from a qualified plan that is rolled over to 
an individual retirement account or individual retirement annuity is 
not treated for purposes of section 408(d)(3)(B) as an amount received 
by an individual from an individual retirement account or individual 
retirement annuity that is not includible in gross income because of 
the application of section 408(d)(3).


Sec.  1.402(c)-3  [Removed]

0
Par. 6. Section 1.402(c)-3 is removed.

0
Par. 7. Amend Sec.  1.403(b)-6 by revising and republishing paragraph 
(e).
    The revision and republication read as follows:


Sec.  1.403(b)-6  Timing of distributions and benefits.

* * * * *
    (e) Minimum required distributions for eligible plans--(1) In 
general. Under section 403(b)(10), a section 403(b) contract must meet 
the minimum distribution requirements of section 401(a)(9) (in both 
form and operation).

[[Page 58947]]

See section 401(a)(9) for these requirements.
    (2) Generally treated as IRAs. For purposes of applying the minimum 
distribution requirements of section 401(a)(9) to section 403(b) 
contracts, the minimum distribution requirements applicable to 
individual retirement annuities described in section 408(b) and 
individual retirement accounts described in section 408(a) apply to 
section 403(b) contracts. Consequently, except as otherwise provided in 
this paragraph (e), the minimum distribution requirements of section 
401(a)(9) are applied to section 403(b) contracts in accordance with 
the provisions in Sec.  1.408-8 that apply to an IRA that is not a Roth 
IRA.
    (3) Exceptions under which qualified plan rules will apply--(i) 
Required beginning date. The required beginning date for purposes of 
section 403(b)(10) is determined in accordance with Sec.  1.401(a)(9)-
2(b) (rather than Sec.  1.408-8(b)(1)).
    (ii) Amounts not taken into account. The amounts not taken into 
account in determining whether the minimum distribution requirement of 
section 401(a)(9) has been satisfied for a calendar year are the 
amounts described in Sec.  1.402(c)-2(c)(3) (rather than the amounts 
described in Sec.  1.408-8(g)(2)).
    (iii) Designated Roth account. The rules of Sec.  1.401(a)(9)-
3(a)(2) (which provides that if an employee's entire interest under a 
defined contribution plan is in a designated Roth account, then no 
distributions are required during the employee's lifetime and, upon 
death, the employee is treated as having died before the required 
beginning date), Sec.  1.401(a)(9)-5(b)(3) (which excludes amounts held 
in a designated Roth account from the employee's account balance), and 
Sec.  1.401(a)(9)-5(g)(2)(iii) (regarding distributions from designated 
Roth accounts) apply to a designated Roth account in a section 403(b) 
contract (rather than the rules of Sec.  1.408-8(b)(1)(ii) that apply 
to a Roth IRA).
    (iv) Qualifying longevity annuity contracts. The rules in Sec.  
1.401(a)(9)-6(q)(2)(i) (relating to the limitation on premiums for a 
qualifying longevity annuity contract (QLAC), as defined in Sec.  
1.401(a)(9)-6(q)(1)) and Sec.  1.401(a)(9)-6(q)(4)(i)(A) (relating to 
reliance on representations with respect to a QLAC) apply to the 
purchase of a QLAC under a section 403(b) plan (rather than the rules 
in Sec.  1.408-8(h)(2) and (3)).
    (4) Surviving spouse rule does not apply. The rule in Sec.  1.408-
8(c) (under which the surviving spouse of an IRA owner is permitted to 
treat an IRA of the decedent as the spouse's own IRA) does not apply to 
a section 403(b) contract. Thus, the surviving spouse of a participant 
is not permitted to treat a section 403(b) contract as the spouse's own 
section 403(b) contract, even if the spouse is the sole beneficiary.
    (5) Retirement income accounts. For purposes of Sec.  1.401(a)(9)-
6(d) (relating to annuity contracts purchased under a defined 
contribution plan), annuity payments provided with respect to 
retirement income accounts do not fail to satisfy the requirements of 
section 401(a)(9) merely because the payments are not made under an 
annuity contract purchased from an insurance company that is licensed 
to do business under the laws of a State, provided that the 
relationship between the annuity payments and the retirement income 
accounts is not inconsistent with any rules prescribed by the 
Commissioner in revenue rulings, notices, or other guidance published 
in the Internal Revenue Bulletin (see Sec.  601.601(d) of this 
chapter). See also Sec.  1.403(b)-9(a)(5) for additional rules relating 
to annuities payable from a retirement income account.
    (6) Special rules for benefits accruing before December 31, 1986--
(i) Non-applicability of section 401(a)(9) to pre-'87 account balance. 
The minimum distribution requirements of section 401(a)(9) do not apply 
to the undistributed portion of the account balance under a section 
403(b) contract valued as of December 31, 1986, exclusive of subsequent 
earnings (pre-'87 account balance). The minimum distribution 
requirements of section 401(a)(9) apply to all benefits under any 
section 403(b) contract accruing after December 31, 1986 (post-'86 
account balance), including earnings after December 31, 1986. 
Consequently, the post-'86 account balance includes earnings after 
December 31, 1986, on contributions made before January 1, 1987, in 
addition to the contributions made after December 31, 1986, and 
earnings thereon.
    (ii) Recordkeeping required. The issuer or custodian of the section 
403(b) contract must keep records that enable it to identify the pre-
'87 account balance and subsequent changes as set forth in paragraph 
(e)(6)(iii) of this section and provide that information upon request 
to the relevant employee or beneficiaries with respect to the contract. 
If the issuer or custodian does not keep those records, the entire 
account balance is treated as subject to section 401(a)(9).
    (iii) Applicability of section 401(a)(9) to post-'86 account 
balance. In applying the minimum distribution requirements of section 
401(a)(9), only the post-'86 account balance is used to calculate the 
required minimum distribution for a calendar year. The amount of any 
distribution from a contract is treated as being paid from the post-'86 
account balance to the extent the distribution is required to satisfy 
the minimum distribution requirement with respect to that contract for 
a calendar year. Any amount distributed in a calendar year from a 
contract in excess of the required minimum distribution for a calendar 
year with respect to that contract is treated as paid from the pre-'87 
account balance, if any, of that contract.
    (iv) Rollover of amounts from pre-'87 account balance. If an amount 
is distributed from the pre-'87 account balance and rolled over to 
another section 403(b) contract, the amount is treated as part of the 
post-'86 account balance in that second contract. However, if the pre-
'87 account balance under a section 403(b) contract is directly 
transferred to another section 403(b) contract (as permitted under 
Sec.  1.403(b)-10(b)), the amount transferred retains its character as 
a pre-'87 account balance, provided the issuer of the transferee 
contract satisfies the recordkeeping requirements of paragraph 
(e)(6)(ii) of this section.
    (v) Relevance of distinction between pre-'87 and post-'86 account 
balance for purposes of section 72. The distinction between the pre-'87 
account balance and the post-'86 account balance provided for under 
this paragraph (e)(6) has no relevance for purposes of determining the 
portion of a distribution that is includible in income under section 
72.
    (vi) Pre-'87 account balance distributions must satisfy incidental 
benefit requirement. The pre-'87 account balance must be distributed in 
accordance with the incidental benefit requirement of Sec.  1.401-
1(b)(1)(i). Distributions attributable to the pre-'87 account balance 
are treated as satisfying this requirement if all distributions from 
the section 403(b) contract (including distributions attributable to 
the post-'86 account balance) satisfy the requirements of Sec.  1.401-
1(b)(1)(i) without regard to this section, and distributions 
attributable to the post-'86 account balance satisfy the rules of this 
paragraph (e) (without regard to this paragraph (e)(6)). Distributions 
attributable to the pre-'87 account balance are treated as satisfying 
the incidental benefit requirement if all distributions from the 
section 403(b) contract (including distributions attributable to both 
the pre-'87 account balance and the post-'86 account balance) satisfy 
the rules of this paragraph (e) (without regard to this paragraph 
(e)(6)).

[[Page 58948]]

    (7) Application to multiple contracts for an employee. The required 
minimum distribution must be determined separately for each section 
403(b) contract of an employee. However, because, as provided in 
paragraph (e)(2) of this section, the minimum distribution requirements 
of section 401(a)(9) apply to section 403(b) contracts in accordance 
with the provisions in Sec.  1.408-8, the required minimum distribution 
from one section 403(b) contract of an employee is permitted to be 
distributed from another section 403(b) contract in order to satisfy 
the minimum distribution requirements of section 401(a)(9). Thus, as 
provided in Sec.  1.408-8(e), with respect to IRAs, the required 
minimum distribution amount from each contract is then totaled and the 
total minimum distribution taken from any one or more of the individual 
section 403(b) contracts. However, consistent with the rules in Sec.  
1.408-8(e), only amounts in section 403(b) contracts that an individual 
holds as an employee may be aggregated. In addition, amounts in section 
403(b) contracts that a person holds as a beneficiary of a decedent may 
be aggregated, but those amounts may not be aggregated with amounts 
held in section 403(b) contracts that the person holds as the employee 
or as the beneficiary of another decedent. Distributions from section 
403(b) contracts do not satisfy the minimum distribution requirements 
for IRAs, nor do distributions from IRAs satisfy the minimum 
distribution requirements for section 403(b) contracts.
    (8) Governmental plans. A section 403(b) contract that is part of a 
governmental plan (within the meaning of section 414(d)) is treated as 
having complied with section 401(a)(9) for all years to which section 
401(a)(9) applies to the contract, if the terms of the contract reflect 
a reasonable, good faith interpretation of section 401(a)(9).
    (9) Effective date. This paragraph (e) applies for purposes of 
determining required minimum distributions for calendar years beginning 
on or after January 1, 2025. For earlier calendar years, the rules of 
26 CFR 1.403(b)-6(e) (as it appeared in the April 1, 2023, edition of 
26 CFR part 1) apply.
* * * * *

0
Par. 8. Revise and republish Sec.  1.408-8 to read as follows:


Sec.  1.408-8  Distribution requirements for individual retirement 
plans.

    (a) Applicability of section 401(a)(9)--(1) In general. An IRA is 
subject to the required minimum distribution requirements of section 
401(a)(9). In order to satisfy section 401(a)(9), the rules of 
Sec. Sec.  1.401(a)(9)-1 through 1.401(a)(9)-9 must be applied, except 
as otherwise provided in this section. For example, if the owner of an 
individual retirement account dies before the IRA owner's required 
beginning date, whether the 10-year rule or the life expectancy rule 
applies to distributions after the IRA owner's death is determined in 
accordance with Sec.  1.401(a)(9)-3(c), and the rules of Sec.  
1.401(a)(9)-4 apply for purposes of determining an IRA owner's 
designated beneficiary. The amount of the minimum distribution required 
for each calendar year from an individual retirement account is 
determined in accordance with Sec.  1.401(a)(9)-5 and the minimum 
distribution required for each calendar year from an individual 
retirement annuity described in section 408(b) is determined in 
accordance with Sec.  1.401(a)(9)-6 (including Sec.  1.401(a)(9)-
6(d)(2)).
    (2) Definition of IRA and IRA owner. For purposes of this section, 
an IRA is an individual retirement account or annuity described in 
section 408(a) or (b), and the IRA owner is the individual for whom an 
IRA is originally established by contributions for the benefit of that 
individual and that individual's beneficiaries.
    (3) Substitution of specific terms. For purposes of applying the 
required minimum distribution rules of Sec. Sec.  1.401(a)(9)-1 through 
1.401(a)(9)-9, the IRA trustee, custodian, or issuer is treated as the 
plan administrator, and the IRA owner is substituted for the employee.
    (4) Treatment of SEPs and SIMPLE IRA Plans. IRAs that receive 
employer contributions under a SEP arrangement (within the meaning of 
section 408(k)) or a SIMPLE IRA plan (within the meaning of section 
408(p)) are treated as IRAs, rather than employer plans, for purposes 
of section 401(a)(9) and are, therefore, subject to the distribution 
rules in this section.
    (b) Different rules for IRAs and qualified plans--(1) Determination 
of required beginning date--(i) In general. An IRA owner's required 
beginning date is determined using the rules for employees who are 5-
percent owners under Sec.  1.401(a)(9)-2(b)(3). Thus, the IRA owner's 
required beginning date is April 1 of the calendar year following the 
calendar year in which the individual attains the applicable age.
    (ii) Special rules for Roth IRAs. No minimum distributions are 
required to be made from a Roth IRA while the owner is alive. After the 
Roth IRA owner dies, the required minimum distribution rules apply to 
the Roth IRA as though the Roth IRA owner died before his or her 
required beginning date. In accordance with section 
401(a)(9)(B)(iv)(II), if the sole beneficiary is the Roth IRA owner's 
surviving spouse, then the surviving spouse may delay distributions 
until the Roth IRA owner would have attained the applicable age.
    (2) Account balance determination. For purposes of determining the 
required minimum distribution from an IRA for any calendar year, the 
account balance of the IRA as of December 31 of the calendar year 
preceding the calendar year for which distributions are required to be 
made is substituted for the account balance of the employee under Sec.  
1.401(a)(9)-5(b). Except as provided in paragraph (d) of this section, 
no adjustments are made for contributions or distributions after that 
date.
    (3) Determination of portion of distribution that is a required 
minimum distribution. The portion of a distribution from an IRA that is 
a required minimum distribution and thus not eligible for rollover is 
determined in the same manner as provided in Sec.  1.402(c)-2(f) and 
(j) for a distribution from a qualified plan. For example, if a minimum 
distribution to an IRA owner is required under section 401(a)(9)(A)(ii) 
for a calendar year, any amount distributed during a calendar year from 
an IRA of that IRA owner is treated as a required minimum distribution 
under section 401(a)(9) to the extent that the total required minimum 
distribution for the year under section 401(a)(9) from all of that IRA 
owner's IRAs has not been satisfied (either by a distribution from the 
IRA or, as permitted under paragraph (e) of this section, from another 
IRA).
    (4) Documentation requirements--(i) Disabled or chronically ill 
beneficiaries. In determining whether an IRA owner's designated 
beneficiary is disabled or chronically ill for purposes of Sec.  
1.401(a)(9)-4(e), the required documentation described in Sec.  
1.401(a)(9)-4(e)(7) need not be provided to the IRA trustee, custodian, 
or issuer.
    (ii) Trust documentation. In determining whether the requirements 
of Sec.  1.401(a)(9)-4(f)(2) are met (to determine whether a trust is a 
see-through trust), the trust documentation described in Sec.  
1.401(a)(9)-4(h) need not be provided to the IRA trustee, custodian, or 
issuer.
    (c) Surviving spouse treating IRA as own--(1) Election generally 
permitted--(i) In general. The surviving spouse of an individual may 
elect, in the manner described in paragraph (c)(2) of this section, to 
treat the surviving spouse's entire interest as a beneficiary in the

[[Page 58949]]

individual's IRA (or the remaining part of that interest if 
distributions have begun) as the surviving spouse's own IRA.
    (ii) Eligibility to make election. In order to make the election 
described in this paragraph (c)(1), the surviving spouse must be the 
sole beneficiary of the IRA and have an unlimited right to withdraw 
amounts from the IRA. If a trust is named as beneficiary of the IRA, 
this requirement is not satisfied even if the surviving spouse is the 
sole beneficiary of the trust.
    (iii) Timing of election. If Sec.  1.402(c)-2(j)(4) (the special 
rule for catch-up distributions after a surviving spouse reaches the 
applicable age) would apply to the IRA owner's surviving spouse had a 
distribution been made directly to the surviving spouse in a calendar 
year, then, except as provided in paragraph (c)(1)(iv) of this section, 
the election described in this paragraph (c)(1) may not be made in that 
calendar year.
    (iv) Exception for late elections. In the case of a surviving 
spouse who, pursuant to the timing rule in paragraph (c)(1)(iii) of 
this section, may not make the election described in paragraph 
(c)(1)(i) of this section in a calendar year, the spouse may 
nevertheless make the election in that calendar year provided that the 
election does not apply to amounts in the IRA that would be treated as 
required minimum distributions under Sec.  1.402(c)-2(j)(4)(ii) had 
they been distributed in that calendar year. Thus, the election can be 
made in a calendar year only after the amounts treated as required 
minimum distributions under Sec.  1.402(c)-2(j)(4)(ii) for that 
calendar year have been distributed from the IRA.
    (2) Election procedures. The election described in paragraph (c)(1) 
of this section is made by the surviving spouse redesignating the 
account as an account in the name of the surviving spouse as IRA owner 
rather than as beneficiary. Alternatively, a surviving spouse eligible 
to make the election is deemed to have made the election if, at any 
time, either of the following occurs--
    (i) Any amount in the IRA that would be required to be distributed 
to the surviving spouse as beneficiary under section 401(a)(9)(B) for a 
calendar year following the calendar year of the IRA owner's death is 
not distributed within the time period required under section 
401(a)(9)(B); or
    (ii) A contribution (other than a rollover of a distribution from 
an eligible retirement plan of the decedent) is made to the IRA.
    (3) Effect of election. Following an election described in 
paragraph (c)(1) of this section, the surviving spouse is considered 
the IRA owner for whose benefit the trust is maintained for all 
purposes under the Internal Revenue Code (including section 72(t)). 
Thus, for example, the required minimum distribution for the calendar 
year of the election and each subsequent calendar year is determined 
under section 401(a)(9)(A) with the spouse as IRA owner and not section 
401(a)(9)(B) with the surviving spouse as the deceased IRA owner's 
beneficiary. However, if the election is made in the calendar year that 
includes the date of the IRA owner's death, the spouse is not required 
to take a required minimum distribution as the IRA owner for that 
calendar year. Instead, the spouse is required to take a required 
minimum distribution for that year, determined with respect to the 
deceased IRA owner under the rules of Sec.  1.401(a)(9)-5(c), to the 
extent the distribution was not made to the IRA owner before death.
    (d) Treatment of rollovers and transfers--(1) Treatment of 
rollovers--(i) In general. If a distribution is rolled over to an IRA, 
then the rules in Sec.  1.401(a)(9)-7 apply for purposes of determining 
the account balance and the required minimum distribution for that IRA. 
However, because the value of the account balance is determined as of 
December 31 of the year preceding the year for which the required 
minimum distribution is being determined, and not as of a valuation 
date in the preceding year, the account balance of the IRA is adjusted 
only if the amount rolled over is not received in the calendar year in 
which the amount was distributed. If the amount rolled over is received 
in the calendar year following the calendar year in which the amount 
was distributed, then, for purposes of determining the required minimum 
distribution for that following calendar year, the account balance of 
the IRA as of December 31 of the calendar year in which the 
distribution was made must be adjusted by the amount received in 
accordance with Sec.  1.401(a)(9)-7(b).
    (ii) Spousal rollovers. A surviving spouse is permitted to roll 
over a distribution to an IRA as the beneficiary of the deceased 
employee or IRA owner, and the rules of paragraph (d)(1)(i) of this 
section apply to that IRA. A surviving spouse may also elect to treat 
that IRA as the spouse's own IRA in accordance with paragraph (c) of 
this section.
    (2) Special rules for death before required beginning date--(i) 
Carryover of election under qualified plan or IRA. If an employee or 
IRA owner dies before the required beginning date and the surviving 
spouse rolls over a distribution of the employee's or IRA owner's 
interest to an IRA in the spouse's capacity as a beneficiary of the 
deceased employee or IRA owner, then, except as provided in paragraph 
(d)(2)(ii) of this section, the method for determining required minimum 
distributions that applied to that surviving spouse under the 
distributing plan or IRA (such as when a beneficiary makes an election 
described in Sec.  1.401(a)(9)-3(c)(5)(iii)) also applies to the 
receiving IRA. Thus, for example, if an employee who died before the 
required beginning date designated the employee's surviving spouse as a 
beneficiary of the employee's interest in the plan and the plan 
provides that the surviving spouse is subject to the 10-year rule 
described in Sec.  1.401(a)(9)-3(c)(4), then the 10-year rule also 
applies to any IRA in the name of the decedent that receives a rollover 
of the employee's interest.
    (ii) Change from 5-year rule or 10-year rule to life expectancy 
payments. If the 5-year rule or 10-year rule described in Sec.  
1.401(a)(9)-3(b)(2), (c)(2), or (c)(3), respectively, applies to a 
distributing plan or IRA and a distribution is made to the employee's 
surviving spouse before the deadline described in Sec.  1.401(a)(9)-
3(b)(4)(iii) or (c)(5)(iii) that would have applied had the 
distributing plan or IRA permitted the surviving spouse to make an 
election between the 5-year rule or 10-year rule and the life 
expectancy rule (or, in the case of a defined benefit plan, the annuity 
payment rule), then the surviving spouse may elect to have the life 
expectancy rule described in Sec.  1.401(a)(9)-3(c)(4) or the annuity 
payment rule described in Sec.  1.401(a)(9)-3(b)(3) apply to any IRA to 
which any portion of that distribution is rolled over. However, see 
Sec.  1.402(c)-2(j)(4)(ii) to determine the portion of that 
distribution that is treated as a required minimum distribution in the 
calendar year of the distribution and thus is not eligible for 
rollover.
    (iii) Spousal rollover to spouse's own IRA. If an employee or IRA 
owner dies before the required beginning date and the surviving spouse 
rolls over a distribution described in paragraph (d)(2)(i) of this 
section from the surviving spouse's IRA in the capacity as the 
beneficiary of the decedent to the surviving spouse's own IRA, then, in 
determining the amount that is treated as a required minimum 
distribution under section 401(a)(9) and thus is not eligible for 
rollover, the rules of Sec.  1.402(c)-2(j)(4) are applied as if the 
distribution was made directly from the decedent's interest in the plan 
or IRA to the surviving spouse's own IRA.

[[Page 58950]]

    (3) Applicability of rollover rules to non-spouse beneficiary. The 
rules of paragraphs (d)(1)(i), (2)(i) and (ii) of this section apply to 
a non-spouse beneficiary who makes an election to have a distribution 
made in the form of a direct trustee-to-trustee transfer as described 
in section 402(c)(11) in the same manner as a rollover of a 
distribution made by a surviving spouse.
    (4) Treatment of transfers. In the case of a trustee-to-trustee 
transfer from one IRA to another IRA that is not a distribution and 
rollover, the transfer is not treated as a distribution by the 
transferor IRA for purposes of section 401(a)(9). Accordingly, the 
minimum distribution requirement with respect to the transferor IRA 
must still be satisfied. After the transfer, the employee's account 
balance and the required minimum distribution under the transferee IRA 
are determined in the same manner that an account balance and required 
minimum distribution are determined under an IRA receiving a rollover 
contribution under paragraph (d)(1) of this section.
    (e) Application of section 401(a)(9) for multiple IRAs--(1) 
Distribution from one IRA to satisfy total required minimum 
distribution--(i) In general. The required minimum distribution from 
one IRA is permitted to be distributed from another IRA in order to 
satisfy section 401(a)(9), subject to the limitations of paragraphs 
(e)(2) and (3) of this section. Except as provided in paragraph 
(e)(1)(ii) of this section, the required minimum distribution must be 
calculated separately for each IRA and the sum of those separately 
calculated required minimum distributions may be distributed from any 
one or more of the IRAs under the rules set forth in this paragraph 
(e).
    (ii) Permitted aggregation of annuity contract and account balance. 
Subject to the limitations of paragraphs (e)(2) and (3) of this 
section, an individual who holds an IRA that is an annuity contract 
described in section 408(b) may elect to aggregate that IRA with one or 
more IRAs with account balances that the individual holds and apply the 
optional aggregation rule of Sec.  1.401(a)(9)-5(a)(5)(iv) with respect 
to the annuity contract and the account balances under those IRAs as if 
the account balances were the remaining account balances following the 
purchase of the annuity contract with a portion of those account 
balances.
    (2) IRAs eligible for aggregate treatment--(i) IRA owners. 
Generally, only amounts in IRAs that an individual holds as the IRA 
owner are aggregated for purposes of paragraph (e)(1) of this section. 
Except in the case of a surviving spouse electing to treat a decedent's 
IRA as the spouse's own IRA, an IRA that a beneficiary acquires as a 
result of the death of an individual is not treated as an IRA of the 
beneficiary but rather as an IRA of the decedent for purposes of this 
paragraph (e). Thus, for example, for purposes of satisfying the 
minimum distribution requirements with respect to one IRA by making 
distributions from another IRA, IRAs for which the individual is the 
IRA owner are not aggregated with IRAs for which the individual is a 
beneficiary.
    (ii) IRA beneficiaries. IRAs that a person holds as a beneficiary 
of a decedent are aggregated for purposes of paragraph (e)(1) of this 
section, but those amounts are not aggregated with IRAs that the person 
holds as the owner or as the beneficiary of a different decedent.
    (3) Non-Roth IRAs are treated separately from section 403(b) 
contracts and Roth IRAs. Distributions from an IRA that is not a Roth 
IRA may not be used to satisfy the required minimum distribution 
requirements with respect to a Roth IRA, or a section 403(b) contract 
(as defined in Sec.  1.403(b)-2(b)(16)(i)). Similarly, distributions 
from a Roth IRA do not satisfy the required minimum distribution 
requirements with respect to a section 403(b) contract or an IRA that 
is not a Roth IRA. In addition, distributions from a section 403(b) 
contract do not satisfy the required minimum distribution requirements 
with respect to an IRA.
    (4) Allocation rule for partial distributions in year of death--(i) 
Distribution required in year of IRA owner's death. This paragraph 
(e)(4) provides a special rule that applies if an IRA owner has 
multiple IRAs (which do not all have identical beneficiary 
designations) that are aggregated in accordance with paragraph (e)(1) 
of this section and that IRA owner dies before taking the total 
required minimum distribution for the calendar year of the IRA owner's 
death (that is, there is a shortfall). In that case, each of the 
owner's IRAs is subject to a requirement to distribute a proportionate 
share of the shortfall for the calendar year to a beneficiary of that 
IRA, with the proportions based on the account balances determined 
under paragraph (b)(2) of this section. This allocation of the 
shortfall to a particular IRA is made without regard to whether some of 
the required minimum distribution for the calendar year was already 
made to the IRA owner from that IRA.
    (ii) Distribution requirement in the year of beneficiary's death. 
Rules similar to the rules of paragraph (e)(4)(i) of this section apply 
in the case of a beneficiary of multiple IRAs that are aggregated under 
paragraph (e)(1) of this section if a required minimum distribution is 
due for that beneficiary in the calendar year of the beneficiary's 
death, to the extent that the amount was not distributed to the 
beneficiary.
    (iii) Example. Assume IRA owner X died on December 31, 2024, at the 
age of 75. At the time of X's death, X owned two separate IRAs, IRA Y 
and IRA Z, neither of which is a Roth IRA. The balance of IRA Y as of 
December 31, 2023, was $100,000 and the balance of IRA Z as of December 
31, 2023, was $50,000. X died after X's required beginning date and 
under the rules of paragraph (e)(1) of this section, the total of the 
2024 required minimum distributions for IRA Y and IRA Z is $6,097.56 
($150,000/24.6). X designated A as his beneficiary under IRA Y and B as 
his beneficiary under IRA Z. Prior to X's death, X had taken a $3,000 
distribution from IRA Z in 2024. Under the rules of paragraph (e)(4)(i) 
of this section, the remaining portion of the 2024 required minimum 
distribution ($3,097.56) is allocated two-thirds to IRA Y and one-third 
to IRA Z. Thus, in the calendar year of X's death A is required to take 
a required minimum distribution of $2,065.04 from IRA Y and B is 
required to take a required minimum distribution of $1,032.52 from IRA 
Z.
    (f) Reporting requirements. The trustee, custodian, or issuer of an 
IRA is required to report information with respect to the minimum 
amount required to be distributed from the IRA for each calendar year 
to individuals or entities, at the time, and in the manner, prescribed 
by the Commissioner in revenue rulings, notices, and other guidance 
published in the Internal Revenue Bulletin (see Sec.  601.601(d) of 
this chapter), as well as the applicable Federal tax forms and 
accompanying instructions.
    (g) Distributions taken into account--(1) General rule. Except as 
provided in paragraph (g)(2) of this section, all amounts distributed 
from an IRA are taken into account in determining whether section 
401(a)(9) is satisfied, regardless of whether the amount is includible 
in income. Thus, for example, a qualified charitable distribution made 
pursuant to section 408(d)(8) is taken into account in determining 
whether section 401(a)(9) is satisfied.
    (2) Amounts not taken into account. The following amounts are not 
taken into account in determining whether the required minimum 
distribution with

[[Page 58951]]

respect to an IRA for a calendar year has been made--
    (i) Contributions returned pursuant to section 408(d)(4), together 
with the income allocable to these contributions;
    (ii) Contributions returned pursuant to section 408(d)(5);
    (iii) Corrective distributions of excess simplified employee 
pension contributions under section 408(k)(6)(C), together with the 
income allocable to these distributions;
    (iv) Amounts that are treated as distributed pursuant to section 
408(e);
    (v) Amounts that are treated as distributed as a result of the 
purchase of a collectible pursuant to section 408(m);
    (vi) Corrective distributions of excess deferrals as described in 
Sec.  1.402(g)-1(e), together with the income allocable to these 
corrective distributions; and
    (vii) Similar items designated by the Commissioner in revenue 
rulings, notices, and other guidance published in the Internal Revenue 
Bulletin. See Sec.  601.601(d) of this chapter.
    (h) Qualifying longevity annuity contracts--(1) General rule. The 
special rule in Sec.  1.401(a)(9)-5(b)(4) for a QLAC, defined in Sec.  
1.401(a)(9)-6(q), applies to an IRA, subject to the modifications set 
forth in this paragraph (h).
    (2) Reliance on representations. For purposes of the limitation 
described in Sec.  1.401(a)(9)-6(q)(2)(ii), unless the trustee, 
custodian, or issuer of an IRA has actual knowledge to the contrary, 
the trustee, custodian, or issuer may rely on the IRA owner's 
representation (made in writing or other form as may be prescribed by 
the Commissioner) of the amount of the premiums described in Sec.  
1.401(a)(9)-6(q)(2)(ii) that are not paid under the IRA.
    (3) Permitted delay in setting beneficiary designation. In the case 
of a contract that is rolled over from a plan to an IRA before the 
required beginning date under the plan, the contract will not violate 
the rule in Sec.  1.401(a)(9)-6(q)(3)(iii)(F) that a non-spouse 
beneficiary must be irrevocably selected on or before the later of the 
date of purchase and the required beginning date under the IRA, 
provided that the contract requires a beneficiary to be irrevocably 
selected by the end of the year following the year of the rollover.
    (4) Roth IRAs. The rule in Sec.  1.401(a)(9)-5(b)(4) does not apply 
to a Roth IRA. Accordingly, a contract that is purchased under a Roth 
IRA is not treated as a contract that is intended to be a QLAC for 
purposes of applying the dollar limitation rule in Sec.  1.401(a)(9)-
6(q)(2)(ii). If a QLAC is purchased or held under a plan, annuity, 
account, or traditional IRA, and that contract is later rolled over or 
converted to a Roth IRA, the contract is not treated as a contract that 
is intended to be a QLAC after the date of the rollover or conversion. 
Thus, premiums paid with respect to the contract will not be taken into 
account under Sec.  1.401(a)(9)-6(q)(2)(ii) after the date of the 
rollover or conversion.
    (i) [Reserved]
    (j) Applicability date. This section applies for purposes of 
determining required minimum distributions for calendar years beginning 
on or after January 1, 2025. For earlier calendar years, the rules of 
26 CFR 1.408-8 (as it appeared in the April 1, 2023, edition of 26 CFR 
part 1) apply.

0
Par. 9. Amend Sec.  1.457-6 by revising and republishing paragraph (d).
    The revision and republication read as follows:


Sec.  1.457-6  Timing of distributions under eligible plans.

* * * * *
    (d) Minimum required distributions for eligible plans. In order to 
be an eligible plan, a plan must meet the distribution requirements of 
section 457(d)(1) and (2). Under section 457(d)(2), a plan must meet 
the minimum distribution requirements of section 401(a)(9). See section 
401(a)(9) and the regulations thereunder for these requirements. For 
taxable years beginning on or after January 1, 2025, if an eligible 
plan is subject to the rules of Sec.  1.401(a)(9)-5, then the plan must 
meet the requirements of section 401(a)(9)(H). The preceding sentence 
applies to an eligible plan maintained by any eligible employer 
(including an eligible plan of a tax-exempt entity).
* * * * *

PART 31--EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE

0
Par. 10. The authority citation for part 31 continues to read in part 
as follows:

    Authority: 26 U.S.C. 7805, unless otherwise noted.


0
Par. 11. For each section set forth below, revise the section by 
removing the text that appears in the column labeled ``Remove'' and 
replacing it with the text that appears in the column labeled 
``Insert'':

------------------------------------------------------------------------
     Regulation section              Remove                Insert
------------------------------------------------------------------------
Sec.   31.3405(c)-1, Q&A-     ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 1(a).                         Q&A-2''.              2(a)(1)(iii)''.
Sec.   31.3405(c)-1, Q&A-     ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 1(b).                         Q&A-3 through Q&A-    2''.
                               10 and Q&A-14''.
Sec.   31.3405(c)-1, Q&A-4..  ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
                               Q&A-10''.             2(h)''.
Sec.   31.3405(c)-1, Q&A-     ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 7(a).                         Q&A-2''.              2(a)(1)(iii)''.
Sec.   31.3405(c)-1, Q&A-     ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
 10(a).                        Q&A-15''.             2(k)(2)''.
Sec.   31.3405(c)-1, Q&A-11.  ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
                               Q&A-9''.              2(g)''.
Sec.   31.3405(c)-1, Q&A-13.  ``Q&A-10 of Sec.      ``Sec.   1.402(c)-
                               1.402(c)-2''.         2(h)''.
Sec.   31.3405(c)-1, Q&A-13.  ``Sec.   1.402(c)-2,  ``Sec.   1.402(c)-
                               Q&A-10''.             2(h)''.
------------------------------------------------------------------------

PART 54--PENSION EXCISE TAXES

0
Par. 12. The authority citation for part 54 continues to read in part 
as follows:

    Authority: 26 U.S.C. 7805, unless otherwise noted.


0
Par. 13. Revise and republish Sec.  54.4974-1 to read as follows:


Sec.  54.4974-1  Excise tax on accumulations in qualified retirement 
plans.

    (a) Imposition of excise tax--(1) In general. If the amount 
distributed to a payee under any qualified retirement plan or any 
eligible deferred compensation plan (as defined in section 457(b)) for 
a calendar year is less than the required minimum distribution for that 
year, section 4974 imposes an excise tax on the payee for the taxable 
year beginning with or within the calendar year during which the amount 
is required to be distributed. Except as provided in paragraph (a)(2) 
of this section, the tax is equal to 25 percent of the amount by which 
the required minimum distribution for a calendar year exceeds the 
actual amount distributed during the calendar year.
    (2) Reduction of tax in certain cases--(i) In general. In the case 
of a taxpayer who satisfies this paragraph (a)(2), the tax described in 
paragraph (a)(1) of this

[[Page 58952]]

section is equal to 10 percent (in lieu of 25 percent) of the amount by 
which the required minimum distribution for a calendar year exceeds the 
actual amount distributed during the calendar year.
    (ii) Eligible taxpayers. This paragraph (a)(2) is satisfied if, by 
the last day of the correction window described in paragraph 
(a)(2)(iii) of this section, the taxpayer--
    (A) Receives a corrective distribution from the applicable plan 
described in paragraph (a)(2)(iv) of this section of the amount by 
which the required minimum distribution for a calendar year exceeds the 
actual amount distributed during the calendar year from that plan; and
    (B) Files a return reflecting the tax described in this paragraph 
(a).
    (iii) Correction window. For purposes of paragraph (a)(2) of this 
section, the correction window ends on the earliest of--
    (A) The date a notice of deficiency under section 6212 with respect 
to the tax imposed by section 4974(a) is mailed;
    (B) The date on which the tax imposed by section 4974(a) is 
assessed; or
    (C) The last day of the second taxable year that begins after the 
end of the taxable year in which the tax under section 4974(a) is 
imposed.
    (iv) Applicable plan. If the minimum distribution was required to 
be paid from a particular qualified retirement plan or eligible 
deferred compensation plan, then the applicable plan is that particular 
qualified retirement plan or eligible deferred compensation plan. 
However, if the requirement to take a minimum distribution could have 
been satisfied by a payment from any one of a number of qualified 
retirement plans (such as an individual retirement account under 
section 408(a) or a section 403(b) plan), then the corrective 
distribution may be taken from any one of those qualified retirement 
plans.
    (3) Definition of required minimum distribution. For purposes of 
section 4974, the term required minimum distribution means the minimum 
amount required to be distributed pursuant to section 401(a)(9), 
403(b)(10), 408(a)(6), 408(b)(3), or 457(d)(2), as the case may be. 
Except as otherwise provided in paragraph (f) of this section (which 
provides a special rule for amounts required to be distributed by an 
employee's, or an individual's, required beginning date), the required 
minimum distribution for a calendar year is the required minimum 
distribution amount required to be distributed during the calendar 
year.
    (b) Definition of qualified retirement plan. For purposes of 
section 4974, each of the following is a qualified retirement plan--
    (1) A plan described in section 401(a) that includes a trust exempt 
from tax under section 501(a);
    (2) An annuity plan described in section 403(a);
    (3) An annuity contract, custodial account, or retirement income 
account described in section 403(b);
    (4) An individual retirement account described in section 408(a) 
(including a Roth IRA described in section 408A);
    (5) An individual retirement annuity described in section 408(b) 
(including a Roth IRA described in section 408A); or
    (6) Any other plan, contract, account, or annuity that, at any 
time, has been treated as a plan, account, or annuity described in 
paragraphs (b)(1) through (5) of this section but that no longer 
satisfies the applicable requirements for that treatment.
    (c) Determination of required minimum distribution for individual 
accounts--(1) General rule. Except as otherwise provided in this 
paragraph (c), if a payee's interest under a qualified retirement plan 
or any eligible deferred compensation plan is in the form of an 
individual account (and distribution of that account is not being made 
under an annuity contract purchased in accordance with Sec.  
1.401(a)(9)-5(a)(5) and Sec.  1.401(a)(9)-6(d)), the amount of the 
required minimum distribution for any calendar year for purposes of 
section 4974 is the amount required to be distributed to that payee for 
that calendar year determined in accordance with Sec.  1.401(a)(9)-5 as 
provided in the following (whichever applies)--
    (i) Section 401(a)(9), Sec. Sec.  1.401(a)(9)-1 through 
1.401(a)(9)-5, and 1.401(a)(9)-7 through 1.401(a)(9)-9, in the case of 
a plan described in section 401(a) that includes a trust exempt under 
section 501(a) or an annuity plan described in section 403(a);
    (ii) Section 403(b)(10) and Sec.  1.403(b)-6(e) in the case of an 
annuity contract, custodial account, or retirement income account 
described in section 403(b);
    (iii) Section 408(a)(6) or (b)(3) and Sec.  1.408-8 in the case of 
an individual retirement account or annuity described in section 408(a) 
or (b); or
    (iv) Section 457(d) and Sec.  1.457-6(d) in the case of an eligible 
deferred compensation plan.
    (2) Distributions under 5-year rule or 10-year rule. If an employee 
dies before the required beginning date and either Sec.  1.401(a)(9)-
3(c)(2) or (3) applies to the employee's beneficiary, there is no 
required minimum distribution until the end of the calendar year 
described in whichever of those paragraphs applies to the beneficiary 
(that is, the calendar year that includes the fifth anniversary or the 
tenth anniversary of the date of the employee's death, as applicable). 
The required minimum distribution due in that fifth or tenth calendar 
year is the employee's entire interest in the plan.
    (3) Default provisions. Unless otherwise provided under the 
qualified retirement plan or eligible deferred compensation plan (or, 
if applicable, the governing instrument of the plan), the default 
provisions in Sec.  1.401(a)(9)-3(c)(5)(i) apply in determining whether 
paragraph (c)(1) or (2) of this section applies.
    (4) Plans providing uniform required beginning date. For purposes 
of this section, if the plan provides a uniform required beginning date 
for purposes of section 401(a)(9) for all employees in accordance with 
Sec.  1.401(a)(9)-2(b)(4), then the required minimum distribution for 
each calendar year for an employee who is not a 5-percent owner is the 
lesser of the amount determined based on a required beginning date of 
April 1 of the calendar year following the calendar year in which the 
employee attains the applicable age or the amount determined based on 
the required beginning date under the plan. Thus, for example, if an 
employee who was not a 5-percent owner participated in a defined 
contribution plan with a uniform required beginning date (as described 
in the preceding sentence) and the employee died after the applicable 
age (but before April 1 of the calendar year following the calendar 
year in which the employee retired) without a designated beneficiary, 
then required minimum distributions for calendar years after the 
calendar year that includes the date of the employee's death are equal 
to the lesser of--
    (i) The required minimum distribution determined by treating the 
employee as dying before the required beginning date (that is, the 5-
year rule of Sec.  1.401(a)(9)-3(c)(2)); or
    (ii) The required minimum distribution determined by treating the 
employee as dying on or after the required beginning date (annual 
distributions over the employee's remaining life expectancy, as set 
forth in Sec.  1.401(a)(9)-5(d)).
    (d) Determination of required minimum distribution under a defined 
benefit plan or annuity--(1) General rule. If a payee's interest in a 
qualified retirement plan or eligible deferred compensation plan is 
being distributed in the form of an annuity (either directly from the 
plan, in the case of a defined benefit plan, or under an annuity

[[Page 58953]]

contract purchased from an insurance company), then the amount of the 
required minimum distribution for purposes of section 4974 depends on 
whether the annuity is a permissible annuity distribution option or an 
impermissible annuity distribution option. For this purpose--
    (i) A permissible annuity distribution option is an annuity 
contract (or, in the case of annuity distributions from a defined 
benefit plan, a distribution option) that specifically provides for 
distributions that, if made as provided, would for every calendar year 
equal or exceed the minimum distribution amount required to be 
distributed to satisfy the applicable section enumerated in paragraph 
(b) of this section for that calendar year; and
    (ii) An impermissible annuity distribution option is any other 
annuity distribution option.
    (2) Permissible annuity distribution option. If the annuity 
contract (or, in the case of annuity distributions from a defined 
benefit plan, a distribution option) under which distributions to the 
payee are being made is a permissible annuity distribution option, then 
the required minimum distribution for a given calendar year for 
purposes of section 4974 equals the amount that the annuity contract 
(or distribution option) provides is to be distributed for that 
calendar year.
    (3) Impermissible annuity distribution option--(i) General rule. If 
the annuity contract (or, in the case of annuity distributions from a 
defined benefit plan, the distribution option) under which 
distributions to the payee are being made is an impermissible annuity 
distribution option, then the required minimum distribution for each 
calendar year for purposes of section 4974 is the amount that would be 
distributed under the applicable permissible annuity distribution 
option described in this paragraph (d)(3) (or the amount determined by 
the Commissioner if there is no option of this type). The determination 
of which permissible annuity distribution applies depends on whether 
distributions commenced before the death of the employee, whether the 
plan is a defined benefit or defined contribution plan, whether there 
is a designated beneficiary for purposes of section 401(a)(9), and 
whether the designated beneficiary is an eligible designated 
beneficiary under section 401(a)(9)(E)(ii). For this purpose, the 
determination of whether there is a designated beneficiary and whether 
that designated beneficiary is an eligible designated beneficiary is 
made in accordance with Sec.  1.401(a)(9)-4, and the determination of 
which designated beneficiary's life is to be used in the case of 
multiple designated beneficiaries in made in accordance with Sec.  
1.401(a)(9)-5(f).
    (ii) Defined benefit plan--(A) Benefits commence before employee 
dies. If the plan under which distributions are being made is a defined 
benefit plan, benefits commence before the employee dies, and there is 
a designated beneficiary, then the applicable permissible annuity 
distribution option is the joint and survivor annuity option under the 
plan for the lives of the employee and the designated beneficiary that 
is a permissible annuity distribution option and that provides for the 
greatest level amount payable to the employee determined on an annual 
basis. If the plan does not provide an option described in the 
preceding sentence (or there is no designated beneficiary under the 
impermissible annuity distribution option), then the applicable 
permissible annuity distribution option is the life annuity option 
under the plan payable for the life of the employee in level amounts 
with no survivor benefit.
    (B) Employee dies before benefits commence. If the plan under which 
distributions are being made is a defined benefit plan, the employee 
dies before benefits commence, there is a designated beneficiary, and 
the plan has a life annuity option payable for the life of the 
designated beneficiary in level amounts, then the applicable 
permissible annuity distribution option is that life annuity option. If 
there is no designated beneficiary, then the 5-year rule in section 
401(a)(9)(B)(ii) applies in accordance with paragraph (d)(4)(i) of this 
section.
    (iii) Defined contribution plan--(A) In general. If the plan under 
which distributions are being made is a defined contribution plan and 
the impermissible annuity distribution option is an annuity contract 
purchased from an insurance company, then the applicable permissible 
annuity distribution option is the applicable annuity described in 
paragraph (d)(3)(iii)(B) or (C) of this section that could have been 
purchased with the portion of the employee's or individual's account 
that was used to purchase the annuity contract that is the 
impermissible annuity distribution option. The amount of the payments 
under that annuity contract are determined using the interest rate 
prescribed under section 7520 determined as of the date the contract 
was purchased, the ages of the annuitants on that date, and the 
mortality rates in Sec.  1.401(a)(9)-9(e).
    (B) Benefits commence before employee dies. If the plan under which 
distributions are being made is a defined contribution plan, the 
benefits commence before the employee dies, and there is a designated 
beneficiary who is an eligible designated beneficiary within the 
meaning of section 401(a)(9)(E)(ii), then the applicable annuity is the 
joint and survivor annuity option providing level annual payments for 
the lives of the employee and the designated beneficiary, under which 
the amount of the periodic payment that would have been payable to the 
survivor is the applicable percentage under the table in Sec.  
1.401(a)(9)-6(b)(2) (taking into account the rules of Sec.  
1.401(a)(9)-6(k)(2)) of the amount of the periodic payment that would 
have been payable to the employee or individual. If there is no 
designated beneficiary, or if the designated beneficiary is not an 
eligible designated beneficiary under the impermissible distribution 
option, then the annuity described in this paragraph (d)(3)(iii)(B) is 
a life annuity for the life of the employee with no survivor benefit 
that provides level annual payments.
    (C) Employee dies before benefits commence. If the plan under which 
distributions are being made is a defined contribution plan, the 
employee dies before benefits commence, and there is an eligible 
designated beneficiary under the impermissible annuity distribution 
option, then the applicable annuity is a life annuity for the life of 
the designated beneficiary that provides level annual payments and that 
would have been a permissible annuity distribution option. If there is 
no designated beneficiary, then section 401(a)(9)(B)(ii) applies in 
accordance with paragraph (d)(4)(i) of this section. If the designated 
beneficiary is not an eligible designated beneficiary, then section 
401(a)(9)(B)(ii) applies in accordance with paragraph (d)(4)(ii) of 
this section.
    (4) Application of section 401(a)(9)(B)(ii)--(i) Application of 5-
year rule. If the 5-year rule in section 401(a)(9)(B)(ii) applies to 
the distribution to the payee under the contract (or distribution 
option), then no amount is required to be distributed to satisfy the 
applicable enumerated section in paragraph (b) of this section until 
the end of the calendar year that includes the fifth anniversary of the 
date of the employee's death. For the calendar year that includes the 
fifth anniversary of the date of the employee's death, the amount 
required to be distributed to satisfy the applicable enumerated section 
is the

[[Page 58954]]

payee's entire remaining interest in the annuity contract (or under the 
plan in the case of distributions from a defined benefit plan). 
However, see Sec.  1.401(a)(9)-6(j) for rules regarding payments that 
are not permitted under section 436.
    (ii) Application of 10-year rule. If the employee dies before 
distribution of the employee's entire interest, section 401(a)(9)(H) 
applies, and the designated beneficiary of the remaining interest is 
not an eligible designated beneficiary, then no amount is required to 
be distributed to satisfy the applicable enumerated section in 
paragraph (b) of this section until the end of the calendar year that 
includes the tenth anniversary of the date of the employee's death. For 
the calendar year that includes the tenth anniversary of the date of 
the employee's death, the amount required to be distributed to satisfy 
the applicable enumerated section is the payee's entire remaining 
interest in the annuity contract.
    (5) Plans providing uniform required beginning date. Rules similar 
to the rules of paragraph (c)(4) of this section (relating to plans 
that have adopted a uniform required beginning date) apply in the case 
of a defined benefit plan.
    (e) Distribution of remaining benefit after deadline for required 
distribution. If there is any remaining benefit with respect to an 
employee (or IRA owner) after the calendar year in which the entire 
remaining benefit is required to be distributed, the required minimum 
distribution for each calendar year subsequent to that calendar year is 
the entire remaining benefit. Thus, for example, if the designated 
beneficiary of the employee is not an eligible designated beneficiary, 
then, pursuant to Sec.  1.401(a)(9)-5(e)(2), the entire interest of the 
employee must be distributed no later than the end of the calendar year 
that includes the tenth anniversary of the date of the employee's 
death, and the required minimum distribution for that calendar year and 
each subsequent calendar year is the remaining portion of the 
employee's interest in the plan.
    (f) Excise tax for first distribution calendar year. If the amount 
not paid is an amount required to be paid by April 1 of a calendar year 
that includes the employee's required beginning date, the missed 
distribution is a required minimum distribution for the previous 
calendar year (that is, for the employee's or the individual's first 
distribution calendar year as determined in accordance with Sec.  
1.401(a)(9)-5(a)(2)(ii)). However, the excise tax under section 4974 is 
calculated with respect to the calendar year that includes the last day 
by which the amount is required to be distributed (that is, the 
calendar year that includes the employee's or individual's required 
beginning date) even though the preceding calendar year is the calendar 
year for which the amount is required to be distributed. There is also 
a required minimum distribution for the calendar year that includes the 
employee's or individual's required beginning date, and that 
distribution is also required to be made during the calendar year that 
includes the employee's or individual's required beginning date.
    (g) Waiver of excise tax--(1) General rule. The tax under paragraph 
(a) of this section may be waived if the payee establishes to the 
satisfaction of the Commissioner that--
    (i) The failure to distribute the required minimum distribution 
described in this section was due to reasonable error; and
    (ii) Reasonable steps are being taken to remedy the failure.
    (2) Automatic waiver after election to distribute within 10 years 
of employee's death. Unless the Commissioner determines otherwise, the 
tax under paragraph (a) of this section is waived automatically if--
    (i) The employee's or individual's death is before the employee's 
or individual's required beginning date;
    (ii) The payee is an individual--
    (A) Who is an eligible designated beneficiary (as defined in Sec.  
1.401(a)(9)-4(e));
    (B) Whose required minimum distribution amount for a calendar year 
is determined under the life expectancy rule described in Sec.  
1.401(a)(9)-3(c)(4); and
    (C) Who did not make an affirmative election to have the life 
expectancy rule apply as described in Sec.  1.401(a)(9)-3(c)(5)(iii);
    (iii) The payee fails to satisfy the minimum distribution 
requirement; and
    (iv) The payee elects the 10-year rule described in Sec.  
1.401(a)(9)-3(c)(3) by the end of the ninth calendar year following the 
calendar year of the employee's death.
    (3) Automatic waiver for failure to take required minimum 
distribution for the year of death. Unless the Commissioner determines 
otherwise, the tax under paragraph (a) of this section is waived 
automatically if--
    (i) A distribution is required to be made to an individual under 
Sec.  1.401(a)(9)-3 or Sec.  1.401(a)(9)-5 in a calendar year;
    (ii) The individual who was required to take the distribution 
described in paragraph (g)(3)(i) of this section died in that calendar 
year without satisfying that distribution requirement; and
    (iii) The beneficiary of the individual described in paragraph 
(g)(3)(ii) of this section takes a corrective distribution in the 
amount needed to satisfy that distribution requirement no later than 
the tax filing deadline (including extensions thereof) for the taxable 
year of that beneficiary that begins with or within that calendar year 
(or, if later, the last day of the calendar year following that 
calendar year).
    (h) Applicability date. This section applies for taxable years 
beginning on or after January 1, 2025. For earlier taxable years, the 
rules of 26 CFR 54.4974-2 (as it appeared in the April 1, 2023, edition 
of 26 CFR part 54) apply.


Sec.  54.4974-2  [Removed]

0
Par. 14. Section 54.4974-2 is removed.

Douglas W. O'Donnell,
Deputy Commissioner.
    Approved: May 31, 2024.
Aviva R. Aron-Dine,
Acting Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2024-14542 Filed 7-18-24; 8:45 am]
BILLING CODE 4830-01-P