Since the energy now depends on K, these levels are only 2J+1 degenerate due to the 2J+1 different M values that arise for each J value. The eigenfunctions |J,M,K> are the same rotation matrix functions as arise for the spherical-top case.
Could emphasize that since K is squared in the energy that for |k| > 0 the degeneracy is 2(2J+1) while it is 2J+1 for K = 0.