Best Advice? Ignore the 10-Year RMD Rule
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As part of recent regulation updates to the SECURE Act and SECURE 2.0, the IRS released rules on required minimum distributions (RMDs) for IRAs and 401(k)s, addressing the controversial 10-year rule.
READ THE ARTICLEThis rule requires non-eligible designated beneficiaries (mostly non-spouse) of account holders who died after starting RMDs to take annual distributions, fully withdrawing the remaining balance by the end of the 10th year. The IRS upheld the rule, and beneficiaries must begin taking RMDs in 2025, following a waiver from 2021 to 2024.
What you should know: Tax specialist Ed Slott advises against strictly following the minimum RMD requirements. Instead, he recommends proactive tax planning by withdrawing more than the minimum required amount to maximize your use of lower tax brackets, thereby reducing your overall tax burden over the 10-year period. This strategy helps you avoid a large tax bill in the final year when the remaining balance must be withdrawn.