Jacob Wackerhausen | Istock | Getty ImagesWhat to know about the 10-year ruleBefore the Secure Act of 2019, heirs could "stretch" inherited IRA withdrawals over their lifetime, which helped reduce yearly taxes.
But certain accounts inherited since 2020 are subject to the "10-year rule," meaning IRAs must be empty by the 10th year following the original account owner's death.
The rule applies to heirs who are not a spouse, minor child, disabled, chronically ill or certain trusts.
Since then, there's been confusion about whether the heirs subject to the 10-year rule needed to take yearly withdrawals, known as required minimum distributions, or RMDs.
After years of waived penalties, the IRS in July confirmed certain heirs will need to begin yearly RMDs from inherited accounts starting in 2025.
Persons:
Jacob Wackerhausen, there's, Dickson, Judson Meinhart
Organizations:
Istock, Vanguard, Modera Wealth Management
Locations:
Winston, Salem , North Carolina