Understanding 2025's RMD Changes for Inherited IRAs

Staying informed about retirement account rules is crucial for beneficiaries of inherited accounts. Many non-spouse beneficiaries have struggled with the complexities of Required Minimum Distributions (RMDs) for inherited Individual Retirement Accounts (IRAs). The IRS issued new guidance for 2025 to clarify these rules, potentially helping beneficiaries avoid penalties.

The SECURE Act of 2019 & 10-Year Rule

The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 introduced the 10-year rule, mandating that most non-spouse beneficiaries withdraw the entire balance of an inherited IRA within ten years. Initially, many assumed that they could delay withdrawals until the tenth year. However, the IRS later clarified that annual withdrawals were required if the deceased account holder had already begun their RMDs, causing confusion about future distributions. The recent updates aim to clarify and streamline this process for everyone involved.

Relief for Missed RMDs (2021-2024)

According to IRS Notice 2024-35, temporary relief was provided for those who failed to take RMDs from 2021 to 2024. This relief applies only to IRAs inherited from account holders who had already started taking their RMDs. It was a much-needed break for many caught in a difficult situation due to unexpected changes in the law.

New RMD Rule for 2025

Beginning January 1, 2025, waivers for missed RMDs will no longer be available. Beneficiaries need to plan accordingly to meet annual withdrawal requirements, ensuring they avoid penalties and maintain compliance with the updated regulations. Proactive planning is key to financial stability and legal compliance.

Who Is Exempt from the SECURE Act Withdrawal Rule?

Certain groups are not affected by the 10-year rule, and these include:

• Surviving spouses
• Minor children (under 21)
• Individuals with disabilities or chronic illness
• Non-designated beneficiaries (such as charities and estates)
• Accounts inherited before 2020

With the updates rolling out in 2025, understanding these changes becomes urgent for all affected by the rule. Beneficiaries should review their withdrawal plans and consult with financial & tax advisors to ensure compliance with the new guidelines. Reach out to our team if we can help!