Inherited Retirement Accounts & Required Minimum Distributions in Illinois (2025)
If you’ve inherited a retirement account recently, you might be wondering what’s next. The rules around Required Minimum Distributions (RMDs) have changed, and if you’re in Illinois, you’ll want to be aware of what’s coming in January 2025.
First Things First – Who Needs to Worry About RMDs?
If you’re a spouse, a minor child, disabled, chronically ill, or less than 10 years younger than the original account owner, you’re in the clear—special rules apply to you. But if you don’t fit into one of those categories, you’re a 10-year beneficiary under the SECURE Act, meaning you’ve got a decade to withdraw all the money from the account.
So, What’s Changing in 2025?
Good question! Here’s the breakdown:
If the person you inherited the account from was already taking RMDs, you now have to take annual withdrawals in addition to emptying the account by year 10.
If they haven’t started RMDs yet, you can take the money out at your own pace—as long as the account is empty by the end of 10 years.
What Happens if You Don’t Follow the Rules?
This is where it gets serious. Starting in 2025, the IRS will penalize anyone who doesn’t take required annual distributions when they should. That could mean unnecessary taxes and financial headaches down the road.
What Should You Do Now?
Check your inherited account—determine if you’re subject to the 10-year rule.
Find out if you need to take annual distributions—this depends on whether the original owner was already withdrawing funds.
Plan your withdrawals smartly—don’t get caught with a huge tax bill in year 10.
Talk to an estate planning attorney in Illinois—our state laws and tax implications may also affect your financial strategy.
At Russo Law Offices, we help Illinois families make sense of estate planning and retirement account rules. Have questions? We’d love to chat and ensure you’re on the right track.
Give us a call at Russo Law Offices—let’s make sure you stay compliant and financially savvy!
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*The information provided in this blog post is intended for general informational purposes only and should not be construed as legal advice. Each individual's situation is unique, and the laws regarding estate planning can vary by jurisdiction. It is essential to consult with a qualified estate planning attorney to discuss your specific circumstances and to receive personalized legal advice. Russo Law Offices is not responsible for any actions taken based on the information contained in this post.