3 Required Minimum Distribution (RMD) Rule Changes Everyone Must Know Before the End of 2025

The SECURE Acts have altered RMD rules in three material ways: beneficiaries who inherited IRAs after Dec. 31, 2019 generally must resume taking RMDs (on top of the 10‑year payout rule) with missed distributions subject to a 25% penalty (reducible to 10% if corrected within two years via Form 5329); Roth 401(k)s were exempted from RMDs beginning in 2024 (and from 2026 high‑earners aged 50+ will be required to make Roth 401(k) catch‑up contributions if they earn over $145,000); and the cap on qualified charitable distributions (QCDs) was indexed to $108,000 for 2025. These changes make tax‑aware planning more important — beneficiaries should generally spread withdrawals across the 10‑year window to manage tax exposure, while IRA owners 70½+ can use larger QCDs to satisfy RMDs, reduce AGI and limit Social Security taxation, noting QCDs apply only to IRAs and not to 401(k)s or across spouses’ accounts.

Analysis

The article details three material changes under the SECURE and SECURE 2.0 Acts that directly affect retirement distributions: (1) inherited IRAs for beneficiaries of decedents after Dec. 31, 2019 generally must resume RMDs in addition to the 10-year payout rule; (2) Roth 401(k) accounts are exempt from RMDs beginning in 2024; and (3) the qualified charitable distribution (QCD) cap is indexed to $108,000 for 2025. The piece reiterates that traditional RMDs apply to anyone age 73 or older with a Dec. 31 deadline and emphasizes the steep enforcement penalty for missed RMDs — 25% reduced to 10% if corrected within two years and Form 5329 is filed.

The IRS waived annual RMD enforcement for certain inherited IRAs from 2020–2024 but issued an official ruling last summer clarifying that beneficiaries who inherited from owners already subject to RMDs must continue taking them. Practically, beneficiaries should spread withdrawals across the 10-year period to manage marginal tax exposure and avoid large single-year tax hits that could push them into higher tax brackets.

Roth 401(k) relief from RMDs gives current workers greater flexibility to retain Roth 401(k) balances rather than roll to Roth IRAs, while SECURE 2.0’s 2026 rule will force Roth treatment of catch-up contributions for employees 50+ earning over $145,000. The QCD expansion to $108,000 in 2025 can meaningfully reduce taxable RMDs and adjusted gross income for IRA owners aged 70½+, but QCDs apply only to IRAs, cannot be used for 401(k)s or across spouses’ accounts, and may be an important tool to limit Social Security taxation and AGI‑sensitive phaseouts.

Key Decisions for Investors

• Review inherited IRA positions now to determine whether the beneficiary is required to resume annual RMDs and build a 10‑year withdrawal schedule to smooth taxable income
• If an RMD was missed, correct it promptly and file Form 5329 within two years to reduce the penalty from 25% to 10%, otherwise expect sizeable tax cost
• Consider using QCDs from IRAs up to the new $108,000 2025 limit to satisfy RMDs while lowering AGI and potential Social Security tax exposure, noting QCDs do not apply to 401(k)s or across spouses
• Reassess Roth 401(k) rollover and catch‑up contribution strategies for high earners ahead of the 2026 change that mandates Roth treatment for catch‑ups above $145,000 to optimize tax-efficient retirement income