New rules from the Internal Revenue Service (IRS) will change the way you take the required distributions from inherited IRAs (individual retirement accounts). The ruling changes the age at which account owners must start taking required minimum distributions (RMD), which will go up from 72 to 73, so individuals born in 1951 must receive their first required minimum distribution by April 1, 2025. Vanguard global head of advice methodology Joel Dickson joins Wealth! to break down the new IRA rules and what Americans retirees need to keep in mind moving forward. Dickson summarizes the new ruling: “Basically, for most non-spouse beneficiaries, you are going to have to accelerate your drawdown of the IRAs relative to what had been happening before.” “There’s a silver lining to these new IRS regulations that requires maybe a greater acceleration of that money, which is that if you can avoid large distributions putting you into higher tax brackets in the future, it actually can make some sense from a total tax paid standpoint and even a total wealth standpoint to actually take distributions from an inherited IRA, maybe even more quickly than the IRS regs [regulators] suggest,” says Dickson.
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