What's Changing With RMD Rules in 2025: Three Major Updates for Retirement Accounts

The landscape of retirement planning continues to evolve. Two pieces of legislation—the original SECURE Act from 2019 and the SECURE 2.0 Act that followed—have reshaped how required minimum distributions work. If you’re managing retirement savings through traditional IRAs, 401(k) accounts, or inherited accounts, understanding these shifts is critical before the year ends.

The government offers significant tax advantages to encourage retirement savings: contributions to IRAs and 401(k)s are made pre-tax, and investment growth compounds tax-free over time. However, this tax-deferral benefit doesn’t last indefinitely. The IRS eventually requires withdrawals through RMDs, triggering ordinary income tax obligations. For traditional accounts, the current threshold is age 73—anyone reaching this age must begin taking annual distributions. Missing an RMD deadline carries substantial penalties, and with year-end approaching, there’s limited time to catch up.

Inherited IRAs Now Face Stricter RMD Requirements

If you received an IRA following someone’s passing after December 31, 2019, pay close attention. The original SECURE Act mandated that inherited IRAs be fully liquidated within 10 years. For years, the IRS permitted some flexibility on annual RMD requirements during this 10-year window, waiving enforcement from 2020 through 2024.

That grace period has ended. An official IRS ruling issued last summer clarified that inheritors must now continue taking RMDs if the original account holder was subject to them—all while still adhering to the 10-year complete distribution rule. This dual requirement creates a more rigid framework for inherited account management.

The consequences of non-compliance are severe. Failing to withdraw by December 31 triggers a 25% penalty on the missed amount. That penalty can be reduced to 10% if you correct the error within two years and file Form 5329. Most beneficiaries find that spreading distributions across the 10-year period minimizes tax burden while maintaining compliance.

Roth 401(k) Accounts No Longer Require Distributions During Your Lifetime

A significant advantage emerged for Roth 401(k) holders starting in 2024. Unlike their traditional counterparts, Roth 401(k)s previously shared the same RMD obligations as standard 401(k)s. The SECURE 2.0 Act eliminated this requirement, allowing Roth 401(k) balances to grow indefinitely without forced withdrawals.

This shift opens opportunities for serious savers. Beginning in 2026, employees aged 50 and above earning over $145,000 annually can make enhanced catch-up contributions to Roth 401(k) accounts. By retirement, these individuals may accumulate substantial tax-free balances. With the RMD requirement removed, they can preserve accounts within their 401(k) structure rather than rolling to a Roth IRA, maintaining maximum flexibility without triggering distribution obligations.

Charitable Giving Now Offers Up to $108,000 in RMD Relief

For those inclined toward philanthropy, SECURE 2.0 expanded an existing mechanism to reduce your RMD burden. Qualified charitable distributions (QCDs) allow IRA holders aged 70½ and above to transfer funds directly to eligible nonprofits.

The contribution ceiling increased from $100,000 to $108,000 for 2025, adjusted annually for inflation. A QCD simultaneously counts toward your RMD requirement and generates powerful tax benefits: it bypasses your adjusted gross income entirely, meaning no income tax applies. This positioning allows you to claim the standard deduction while effectively directing charitable support—a strategy that also preserves eligibility for other tax deductions and keeps your Social Security tax obligations lower.

Some restrictions apply. QCDs only work with IRAs; you cannot use them to satisfy RMDs from 401(k)s or other employer-sponsored plans. Additionally, each spouse’s IRA is assessed separately for RMD purposes, so one person’s QCD cannot cover another’s distribution obligation.

Understanding these three shifts—inherited account requirements, Roth 401(k) flexibility, and expanded charitable distribution limits—positions you to navigate 2025 with greater confidence. The deadline approaches quickly, making now the ideal moment to review your retirement account structure and determine which rules apply to your specific situation.