False Facts and Real Consequences: EDU #2509
February 26, 2025
Chris’s Concise Summary:
Jim and Chris examine a recent Suze Orman article on inherited IRA rules, identifying key errors that could mislead readers. They clarify the nuances of the 10-year rule, explain how the required beginning date determines whether annual RMDs are necessary and why Roth IRAs don’t have required minimum distributions. The guys also emphasize the importance of verifying financial information before making decisions.
A note to listeners: Regular listeners know that Jim is always looking for ways to improve. The podcast is no exception, so some changes are coming in the EDU episode descriptions! In this space, between the usual basic summary (now called Chris’s Summary) and the new, more detailed, Jim’s Summary, you’ll soon find links to related articles, documents, and other resources that Jim and Chris believe may be useful or interesting to listeners.
Jim’s “Pithy” Summary:
The guys take a critical look at a recent Suze Orman article discussing inherited IRA rule changes for 2025, identifying inaccuracies that could mislead readers navigating these complex rules. One key issue they highlight is the claim that all inherited IRAs, including Roth IRAs, require annual RMDs under the 10-year rule. Jim and Chris explain why this is incorrect and clarify that the rules depend on whether the original account owner had reached their required beginning date before passing away. They break down how the “at least as rapidly” (ALAR) rule applies to inherited accounts when RMDs were already in progress, ensuring listeners understand the distinctions that many articles fail to address.
The conversation also dives into Roth IRAs, reinforcing that they do not have required minimum distributions during the original owner’s lifetime, which means beneficiaries are not required to take annual distributions. Instead, most non-spouse Roth IRA beneficiaries can allow the funds to grow tax-free and withdraw the full balance in the 10th year. Chris and Jim stress that financial publications often oversimplify these rules, leading to confusion and potential missteps for individuals managing inherited accounts.
In addition to dissecting the article’s errors, the guys discuss broader issues with financial media, including the need for thorough fact-checking and the risks of relying on clickbait-style headlines for retirement planning guidance. They express concerns that many widely shared articles fail to provide the necessary nuance, which could result in readers making uninformed decisions.
Podcast: Play in new window | Download (Duration: 57:19 — 26.2MB)
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