THE FINANCIAL COMMUTE
Hosted by Wealth Advisor Chris Galeski, THE FINANCIAL COMMUTE is a weekly podcast that gives the rundown on what's going on in the current market, how it affects you, and what you can do about it – all designed to fit into your commute. Each week Chris welcomes an expert guest, including Morton Wealth advisors, fund managers, and investment analysts, to break down complex financial topics. Our goal for this podcast is to provide you with the tools to help you navigate this challenging environment, leading to a path of more confident investing.
THE FINANCIAL COMMUTE
Inherited an IRA? What To Know For 2025
On this week’s episode of THE FINANCIAL COMMUTE, host Chris Galeski welcomes Wealth Advisor Patrice Bening to discuss how to strategize distributions when inheriting IRAs, complexities introduced by Secure Act changes in 2020, and what to know for 2025.
Here are some key takeaways from their conversation:
- In 2020, Secure Act 2.0 made it so non-spouse beneficiaries must fully deplete inherited retirement accounts (traditional or Roth IRAs) within 10 years, instead of stretching distributions over their lifetimes.
- Starting in 2025, individuals who inherited IRAs after January 1, 2020, must begin taking annual RMDs within the 10-year window.
- Beneficiaries need to consider their income levels, tax brackets, and financial plans when deciding how much to withdraw annually to minimize taxes and maximize financial benefits.
- Spouses have unique flexibility, such as rolling an inherited IRA into their own account to delay RMDs or treating it as an inherited IRA to access funds penalty-free.
- Minors who inherit IRAs can use their life expectancy for withdrawals until turning 18, after which the 10-year rule applies. Withdrawals can impact eligibility for student aid or repayment plans.
- Individuals aged 70.5 or older can make qualified charitable distributions (QCDs) directly from inherited IRAs to reduce taxable income while fulfilling RMD requirements.
- Failing to take an RMD incurs a 25% penalty, which can be reduced to 10% if corrected within two years. Beneficiaries must stay on top of annual distribution requirements.