“Stay Ahead of the Game: Changes Coming to IRAs in 2025”

In 2025, there are several changes coming to Individual Retirement Accounts (IRAs) that are aimed at helping individuals save more for retirement. One of the changes includes super-sized catch-up contributions for individuals aged 60 to 63, allowing them to contribute up to $10,000 or 150% of the previous catch-up contribution limit. Another change involves an increase in the catch-up contribution limits for individuals aged 60 to 63 who have SIMPLE IRAs, with the new limit being $5,000 or 150% of the regular age 50 catch-up contribution limit. Furthermore, a new 10-year rule for inherited IRAs will take effect, requiring beneficiaries to withdraw all funds in the IRA within ten years of the original account owner’s death. However, there are exceptions to this rule for surviving spouses, children under 21, beneficiaries not more than 10 years younger than the decedent, and those who are disabled or chronically ill.

Additionally, penalties for not taking Required Minimum Distributions (RMDs) from inherited IRAs will take effect in 2025, with a 25% penalty for those who do not comply. There is transitional relief for beneficiaries who did not take RMDs in 2021 through 2024, but starting in 2025, penalties will be enforced. It is important to be aware of the contribution limits and deadlines, excess contribution rules, and RMD requirements for the end of the year to avoid penalties and stay on track with your retirement savings plan. Keeping up to date with changes to IRA rules and regulations can help you make informed decisions about your retirement savings strategy and ensure that you are maximizing your savings potential.