The IRS has issued a notice about the plan for RMDs for inherited IRAs.

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Mike Bernard, CFP® offers advisory services through KFG Wealth Management, LLC dba Korhorn Financial Group. This information is for general financial education and is not intended to provide specific investment advice or recommendations. All investing and investment strategies involve risk, including the potential loss of principal. Asset allocation & diversification do not ensure a profit or prevent a loss in a declining market. Past performance is not a guarantee of future results.
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks….(read more)

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The Internal Revenue Service (IRS) recently announced that required minimum distributions (RMDs) for inherited individual retirement accounts (IRAs) will be postponed until 2025. This news comes as a relief to many beneficiaries who would otherwise be required to start taking distributions from their inherited IRAs this year.

Inherited IRAs are retirement accounts that are passed down to beneficiaries after the original account holder passes away. These accounts are subject to RMDs, which require beneficiaries to start taking withdrawals from the account by a certain age in order to avoid penalties from the IRS.

Under the previous rules, beneficiaries of inherited IRAs were required to start taking RMDs by December 31 of the year following the original account holder’s death. However, due to changes made by the Setting Every Community Up for Retirement Enhancement (SECURE) Act, beneficiaries now have until December 31 of the 10th year after the account holder’s death to deplete the account.

The recent announcement by the IRS further extends the deadline for beneficiaries of inherited IRAs by allowing them to postpone RMDs until 2025. This means that beneficiaries who would have been required to start taking distributions in 2022 now have an additional three years to allow the funds in the account to continue growing tax-deferred.

This extension provides beneficiaries with more flexibility and options when it comes to managing their inherited IRAs. For those who do not need the funds immediately, they can continue to let the money grow tax-free for a longer period of time. This can be especially beneficial for younger beneficiaries who have many years of earning potential ahead of them.

It is important for beneficiaries to carefully consider their options and consult with a financial advisor before making any decisions regarding their inherited IRAs. While the postponement of RMDs may be a welcome relief for some, it is crucial to understand the implications and potential tax consequences of delaying distributions.

Overall, the postponed RMDs for inherited IRAs until 2025 offer beneficiaries more flexibility and control over their retirement accounts. By taking the time to carefully evaluate their options, beneficiaries can make informed decisions that align with their financial goals and objectives.