Christmas is upon us, and 2025 is only a few days away, so I am looking backward and forward for any positive personal financial possibilities that can help us spread some Holiday cheer. I recently found one. Actually, Adam found it and alerted me, so I am passing it along to our audience.
This one affects only a small handful of people, but those who are affected will appreciate the upshot. Personally, I enjoy news that can save money and taxes for anyone qualified to take advantage of another dysfunctional aspect of the U.S. Government. So, what have they done now? Or, perhaps a better question would be, What have they NOT done now?
Back in 2019, Congress passed the Setting Every Community Up for Retirement Act (SECURE 1.0), which was designed to improve the ability of Americans to provide for their own retirement incomes. The original law was filled with unclear and confusing provisions, especially pertaining to Required Minimum Distribution (RMDs) from Inherited IRAs. Most inheritors of IRAs lost the ability to “stretch” RMDs over their own lifetimes.
These changes only applied to IRAs whose original owners died after December 31, 2019. Due to the level of confusion this caused among beneficiaries and their advisors, RMDs were waived until Congress amended uncertain provisions.
Passed in 2022, SECURE 2.0 attempted to clarify remaining questions. However, SECURE 2.0 also failed to deliver complete, clear, and understandable results, and RMDs were again waived, this time until 2025. By then, Congress was to have laid down the law in a concise manner. And once again, the government failed to meet its self-imposed deadline.
SECURE 3.0 is in the works, and expected to pass in 2025 as the “final” product of lawmakers and the IRS. Just days ago, RMDs for affected Inherited Account owners were again waived, this time for 2025, and are now set to resume on January 1, 2026. Whether Congress gets it right this time remains to be determined.
Often, people who inherit IRAs would prefer not taking distributions, resulting in additional time for accounts to grow further in the tax-deferred IRA environment. Merry Christmas to these people, including a few of our clients. They have been fortunate enough to delay withdrawals for multiple years, improving their own retirement situations.
Happy New Year to all, whether or not you benefit from the failures of our elected officials to meet deadlines.
Van Wie Financial is fee-only. For a reason.
