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Starting in 2025, certain heirs with inherited individual retirement accounts must take yearly required withdrawals or face a penalty.
The rule applies to most non-spousal beneficiaries if the original account owner had reached their required minimum distribution age before death.
But some heirs should consider taking funds out sooner, depending on their situation, even if annual withdrawals aren’t required, experts say.

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What to know about the 10-year rule

Before the Secure Act of 2019, heirs could “stretch” inherited IRA withdrawals over their lifetime, which helped reduce yearly taxes.
But certain accounts inherited since 2020 are subject to the “10-year rule,” meaning IRAs must be empty by the 10th year following the original account owner’s death. The rule applies to heirs who are not a spouse, minor child, disabled, chronically ill or certain trusts.

Since then, there’s been confusion about whether the heirs subject to the 10-year rule needed to take yearly withdrawals, known as required minimum distributions, or RMDs.

“You have a multi-dimensional matrix of outcomes for different inherited IRAs,” Dickson said. It’s important to understand how these rules impact your distribution strategy, he added.
After years of waived penalties, the IRS in July confirmed certain heirs will need to begin yearly RMDs from inherited accounts starting in 2025. The rule applies if the original account owner had reached their RMD age before death.
If you miss yearly RMDs or don’t take enough, there is a 25% penalty on the amount you should have withdrawn. But it’s possible to reduce the penalty to 10% if the RMD is “timely corrected” within two years, according to the IRS.

Consider ‘strategic distributions’

If you’re subject to the 10-year rule for your inherited IRA, spreading withdrawals evenly over the 10 years reduces taxes for most heirs, according to research released by Vanguard in June.
However, you should also consider “strategic distributions,” according to certified financial planner Judson Meinhart, director of financial planning at Modera Wealth Management in Winston-Salem, North Carolina.
“It starts by understanding what your current marginal tax rate is” and how that could change over the 10-year window, he said.

For example, it could make sense to make withdrawals during lower-tax years, such as years of unemployment or early retirement before receiving Social Security payments. 
However, boosting adjusted gross income can trigger other consequences, such as eligibility for college financial aid, income-driven student loan payments or Medicare Part B and Part D premiums for retirees. More

Nearly 2 in 5 cardholders have maxed out or come close to maxing out a credit card, according to a new report.
The growing share of maxed-out borrowers is also an indication of where delinquencies are headed.

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Between higher prices and high interest rates, some Americans have had a hard time keeping up.
As a result, many are using more of their available credit and now, nearly 2 in 5 credit cardholders — 37% — have maxed out or come close to maxing out a credit card since the Federal Reserve began raising rates in March 2022, according to a new report by Bankrate.

Most borrowers who are over extended blame rising prices and a higher cost of living, Bankrate found.
Other reasons cardholders blame for maxing out a credit card or coming close include a job or income loss, an emergency expense, medical costs and too much discretionary spending.
“With limited options to absorb those higher costs, many low-income Americans have had no choice but to take on debt to afford costlier essentials — at a time when credit card rates are near record highs,” Sarah Foster, an analyst at Bankrate, said in a statement.

As prices crept higher, so did credit card balances.
The average balance per consumer now stands at $6,329, up 4.8% year over year, according to the latest credit industry insights report from TransUnion.

At the same time, the average credit card charges more than 20% interest — near an all-time high — and half of cardholders carry debt from month to month, according to another report by Bankrate.  
Carrying a higher balance has a direct impact on your utilization rate, the ratio of debt to total credit, and is one of the factors that can influence your credit score. Higher credit score borrowers typically have both higher limits and lower utilization rates.
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Credit experts generally advise borrowers to keep revolving debt below 30% of their available credit to limit the effect that high balances can have.
As of August, the aggregate credit card utilization rate was more than 21%, according to Bankrate’s analysis of Equifax data.
Still, “if you have five credit cards [with utilization rates around] 20%, you have a lot of debt out there,” said Howard Dvorkin, a certified public accountant and the chairman of Debt.com. “People are living a life that they can’t afford right now, and they are putting the balance on credit cards.”

Generation X at risk

More than any other generation, Gen Xers in their 40s and 50s are most likely to have maxed out a credit card or come close in the past two and a half years, according to Bankrate’s report. 
Of Gen Xers, 27% have maxed out their credit cards compared to 23% of millennials and 17% of Baby Boomers. Young adults in Gen Z are the least likely to have maxed out a card, according to the survey, which polled more than 3,500 adults, including 3,015 who are credit cardholders and 1,104 who have either maxed out their credit cards or come close.
Gen X, the so-called “sandwich generation,” must contend with supporting the generations ahead of them and their children at a time when the costs of higher education and health care have never been higher, studies also show.

Potential problems ahead

Cardholders who have maxed out or come close to maxing out their credit cards are also more likely to become delinquent.
Credit card delinquency rates are already higher across the board, the Federal Reserve Bank of New York and TransUnion both reported.
“Consumers have been measured in taking on additional revolving debt despite the inflationary environment over the past few years, although there has been an uptick in delinquencies in recent months,” said Tom McGee, CEO of ICSC, formerly known as the International Council of Shopping Centers.
A debt is considered delinquent when a borrower misses a full billing cycle without making a payment, or what’s considered 30 days past due. That can damage your credit score and impact the interest rate you’ll pay for credit cards, car loans and mortgages — or whether you’ll get a loan at all.
Some of the best ways to improve your credit standing come down to paying your bills on time every month, and in full, if possible, Dvorkin said. “Understand that if you don’t, then whatever you buy, over time, will end up costing you double.”
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NEW YORK, NEW YORK – OCTOBER 16: Traders and others work on the New York Stock Exchange (NYSE) floor in New York City. 
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Here’s what CNBC TV’s producers were watching as the Dow Jones Industrial Average closed at another record, and what’s on the radar for the next session.

Dow record

The Dow set another record close Wednesday, rising 337.28 points
Cisco was the biggest gainer, rising more than 4% after Citi upgraded the stock to a buy rating. CSCO is up over 10% in the last month and closed at its highest since last September.
UnitedHealth was the biggest point contributor to the Dow, rebounding a bit after Tuesday’s post-earnings drop. It was up 2.7%, adding 98 points to the index, but is down 3% in a month
The S&P 500 rose about 0.5%, closing just half a percent off its record from Monday.
The Nasdaq Composite was up roughly 0.3%, 1.6% off its July high
The small-cap Russell 2000 led Wednesday’s gains, up 1.64% and setting its highest close since November 2021. 

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Dow Jones Industrial Average in 2024

Netflix on deck

The streaming giant reports Q3 earnings after the bell on Thursday, as the stock is trading near all-time highs. CNBC’s Julia Boorstin will have a full report on the quarter.
Netflix is up almost 7% in the last three months and has nearly doubled over the past year.
It’s far outpaced other streamers and media companies in that period.
Disney is down 1.75% in three months
Warner Bros. Discovery is up 0.25% over the past three months.
Comcast — which owns NBCUniversal, the parent company of CNBC — is up 6.7% in the period.
Roku is up nearly 20% in the past three months.
Spotify is up roughly 25% in that time.

Semis in focus

We get another read on the health of the chip sector and the artificial intelligence trade when Taiwan Semiconductor Manufacturing reports before the bell. CNBC’s Seema Mody will have all the numbers
The world’s largest contract chip maker, which counts Apple, Nvidia, AMD and Qualcomm among its customers, is up less than 1% over the past three months. However, shares are up 80% this year
Nvidia is up 7.4% in three months
AMD is down 12% in three months
Qualcomm is down 18% in three months
Intel is down 35% in three months
Micron Technology is down 14% in three months
The VanEck Semiconductor ETF (SMH) is down 9.6% in three months
ASML continued its downdraft for a second day, falling another 6.4%. It closed at its lowest since last November and is 38% off its all-time high hit in July

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Taiwan Semiconductor Manufacturing in 2024

Morgan Stanley’s strong quarter

The investment bank’s shares soared to an all-time high after it beat estimates for third quarter revenue and profit, and the firm saw strength across its businesses.
The 6.5% jump was the stock’s best day since November 2020.
Financial focus now turns to the regional banks, with several names reporting Thursday morning.
KeyCorp is up more than 10% in the last three months.
Truist Financial is up about 5% in three months.
Huntington Bancshares is up 11% in three months.
M&T Bank is up 16% in three months.
The SPDR S&P Regional Banking ETF (KRE) was up 1.4% Wednesday and closed at its highest level since March of last year, before the collapse of Silicon Valley Bank.

Flying high

United Airlines shares jumped 12% after its earnings report last night – the best performer in the S&P 500.
The stock closed the day at its highest since February 2020 and is up 75% this year
Its strength lifted other airline stocks.
Delta was up nearly 7% Wednesday and is up about 40% in 2024.
American Airlines was up 7% Wednesday but is down 6% year to date.
JetBlue was up almost 3% Wednesday and is up 28% this year.
UAL’s strength helped the S&P Industrial Sector set a record close. 

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Year-to-date performance for United Airlines

Utility players

The utility sector was the best performer in the S&P 500 Wednesday, rising 2%
The Utilities Select Sector SPDR Fund (XLU) closed at an all-time high, and it’s up about 30% this year
The most recent moves come after Amazon Web Services announced it had signed an agreement with Dominion Energy to explore development of a small modular nuclear reactor
Dominion was up 5% Wednesday and is up around 29% this year
Wednesday’s top utility performer was Vistra Corp, up almost 6%. The stock is also the best performer in the S&P 500 this year, up 252%
Constellation Energy was up 5% Wednesday and 139% this year
AES Corp was up almost 3% Wednesday but down 7% this year

Trump Media jumps

The parent company of the former President’s Truth Social Network rose 15.5%, posting its highest close since late July
Trump Media & Technology Group is up four of the last five trading days and has gained 166% since hitting an all-time low late last month

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC. More

Many Americans face a retirement savings shortfall, but setting aside more could get easier for some older workers in 2025.
Enacted in 2022, the Secure Act 2.0 ushered in several retirement system improvements, including higher 401(k) plan catch-up contributions.
Starting in 2025, workers aged 60 to 63 can boost annual 401(k) catch-up contributions to $10,000 — or 150% of the catch-up limit — whichever is greater.

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Many Americans face a retirement savings shortfall. However, setting aside more money could get easier for some older workers in 2025.
Enacted by Congress in 2022, the Secure Act 2.0 ushered in several retirement system improvements, including updates to 401(k) plans, required withdrawals, 529 college savings plans and more.

While some Secure 2.0 changes have already happened, another key change for “max savers,” will begin in 2025, according to Dave Stinnett, Vanguard’s head of strategic retirement consulting.
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Some 4 in 10 American workers are behind in retirement planning and savings, according to a CNBC survey, which polled roughly 6,700 adults in early August.
But changes to 401(k) catch-up contributions — a higher limit for workers age 50 and older — could soon help certain savers, experts say. Here’s what to know.

Higher 401(k) catch-up contributions

Employees can now defer up to $23,000 into 401(k) plans for 2024, with an extra $7,500 for workers age 50 and older.

But starting in 2025, workers aged 60 to 63 can boost annual 401(k) catch-up contributions to $10,000 — or 150% of the catch-up limit — whichever is greater. The IRS hasn’t yet unveiled the catch-up contribution limit for 2025.  
“This can be a great way for people to boost their retirement savings,” said certified financial planner Jamie Bosse, senior advisor at CGN Advisors in Manhattan, Kansas.

An estimated 15% of eligible workers made catch-up contributions in 2023, according to Vanguard’s 2024 How America Saves report.
Those making catch-up contributions tend to be higher earners, Vanguard’s Stinnett explained. But they could still have “real concerns about being able to retire comfortably.”
More than half of 401(k) participants with income above $150,000 and nearly 40% with an account balance of more than $250,000 made catch-up contributions in 2023, the Vanguard report found.

Roth catch-up contributions

Another Secure 2.0 change will remove the upfront tax break on catch-up contributions for higher earners by only allowing the deposits in after-tax Roth accounts.
The change applies to catch-up deposits to 401(k), 403(b) or 457(b) plans who earned more than $145,000 from a single company the prior year. The amount will adjust for inflation annually. 
However, IRS in August 2023 delayed the implementation of that rule to January 2026. That means workers can still make pretax 401(k) catch-up contributions through 2025, regardless of income. More

Americans tend to overspend during the holiday shopping season and this year will be no different according to forecasts.
With interest rates near an all-time high, leaning on credit cards, or even buy now, pay later, to purchase gifts will come at a high cost if there are missed or late payments.

Americans often splurge on gifts during the holidays.
This year, holiday spending between Nov. 1 and Dec. 31 is expected to increase to a record total of $979.5 billion to $989 billion, according to the National Retail Federation.

Even as credit card debt tops $1.14 trillion, holiday shoppers expect to spend, on average, $1,778, up 8% compared to last year, Deloitte’s holiday retail survey found.
Meanwhile, 28% of holiday shoppers still have not paid off the gifts they purchased for their loved ones last year, according to another holiday spending report by NerdWallet. 

How shoppers pay for holiday gifts

Heading into the peak holiday shopping season, 74% of shoppers plan to use credit cards to make their purchases, NerdWallet found.
Another 28% will tap into savings to buy holiday gifts and 16% will lean on buy now, pay later services. NerdWallet polled more than 1,700 adults in September.  
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Buy now, pay later is now one of the fastest-growing categories in consumer finance and is only expected to become more popular in the months ahead, according to the most recent data from Adobe. Adobe forecasts buy now, pay later spending will peak on Cyber Monday with a new single-day record of $993 million.
However, buy now, pay later loans can be especially hard to track, making it easier for more consumers to get in over their heads, some experts have cautioned, even more than credit cards, which are simpler to account for despite sky-high interest rates.

The problem with credit cards and buy now, pay later

Credit cards are one of the most-expensive ways to borrow money. The average credit card charges more than 20% — near an all-time high.
Alternatively, the option to pay in installments can make financial sense, especially at 0%. 
Yet, buy now, pay later loans “are just another form of credit, disguised as something for free,” said Howard Dvorkin, a certified public accountant and the chairman of Debt.com.
The more buy now, pay later accounts open at once, the more prone consumers become to overspending, missed or late payments and poor credit history, other research shows.
If a consumer misses a payment, there could be late fees, deferred interest or other penalties, depending on the lender. In some cases, those interest rates can be as high as 30%, rivaling the highest credit card charges. 
“This is just another way for financers to put their hands in the pocket of consumers,” Dvorkin said. “It’s a trojan horse.”
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Traders work on the floor of the New York Stock Exchange during morning trading in New York City. 
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Here’s what CNBC TV’s producers were watching as the S&P 500 and Dow Jones Industrial Average retreated from recent highs, and what’s on the radar for the next session.

Apple

Despite concerns about the new iPhone, Apple hit a new all-time high on Tuesday.
The stock ended the session up more than 1%, closing at $233.85. It hit a high of $237.49 before curtailing its gains for the day.
Apple is up 5% in a month and 35% in six months.

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Apple shares over the past six months

DJT

Trading in Trump Media & Technology Group was wild on Tuesday.
The stock finished down nearly 10%. It is down nearly 4% after hours.
Check out the volume: 89 million shares. That is almost triple the ten-day average.
The stock is up 68% in October. 

Regional banks

The big banks are just about done reporting. Now, the regionals move in.
Citizens Financial, based in Providence, Rhode Island, reports before the bell. The stock has gained 12.5% in the past three months, and it’s up 5.5% in a week. The stock hit a new high on Tuesday.
First Horizon, headquartered in Memphis, Tennessee, will also report before the bell. First Horizon is down 1% over the past three months. The stock is up 8% in a week and 4.3% from the July high.
The SPDR S&P Regional Banking ETF (KRE) hit a new high on Tuesday. The ETF is up 6.7% in a week, and it has gained up 10.3% in three months.
Wells Fargo, by the way, is up 10% in a week. In a rare interview on “Mad Money” Tuesday night, CEO Charles Scharf, who’s been leading a buyback charge, said, “We invest in much as we can inside the company and that’s our first priority.”
Goldman Sachs is up 5.2% in week.
Citigroup is down 4.7% in two days.
JPMorgan Chase is up 5.5% in the past week.
Bank of America is up 5.5% in a week, as well.
Morgan Stanley is up 4.4% in a week. The bank reports on Wednesday morning before the bell, and CEO Ted Pick will be live on CNBC TV in the 10 a.m. hour, Eastern.

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Wells Fargo shares in the past week 

The chips

CSX

The railroad reports after the bell Wednesday.
CSX is up 2.6% in the past three months.
It is 11.5% from the February high, but it’s up 4.8% in a week.
Canadian National Railway is 14% from the March high.
Canadian Pacific is 11% from the March high.
Union Pacific is 5% from the February high.
Norfolk Southern is 3.5% from the March high. Shares are up 4.6% in a week. More

Buying a home is often the biggest financial decision you’ll ever make.
Some top-ranked advisors offer a step-by-step guide to buying a home.
Here’s what you need to know.

Morsa Images | Getty

Buying a home is often the biggest financial decision you’ll ever make.
It’s not just about choosing a place to live; it’s about making a long-term investment that will impact your financial future for years to come.

Therefore, if you are looking to buy a home, there are certain steps you should take to prepare for the purchase, according to several advisors ranked in CNBC’s 2024 Financial Advisor 100 List.
“Number one is doing that initial homework and financial planning,” said Brian Brady, vice president at Obermeyer Wood Investment Counsel in Aspen, Colorado. The firm ranks No. 23 on the 2024 CNBC FA 100 list. 
Most important, it has to be a “smart financial decision” that makes the most sense for you, explained Stephen Cohn, co-founder and co-president of Sage Financial Group in West Conshohocken, Pennsylvania. The firm ranks No. 61 on the 2024 CNBC FA 100 list.

More from FA 100:

Here’s a look at more coverage of CNBC’s FA 100 list of top financial advisory firms for 2024:

“I run into a lot of first-time homebuyers, friends, kids, acquaintances. They fall in love with the house, and it may not make sense for them financially,” said Ron Brock, managing director and chief financial officer at Sheaff Brock Investment Advisors in Indianapolis, Indiana. The firm ranks No. 7 on the 2024 CNBC FA 100 list.
He tells them: “Just be smart. Don’t be house poor.”

Here are some key steps to consider if you plan to buy a home:

1. Have a strong credit score

Make sure you have strong credit, said Shaun Williams, private wealth advisor and partner at Paragon Capital Management in Denver, Colorado. The firm ranks No. 38 on the 2024 CNBC FA 100 list. 
“The higher the credit score, the better the terms you’re going to get on the loan, and the lower the interest rate will be,” said Ryan D. Dennehy, a financial advisor at California Financial Advisors in San Ramon, California. The firm ranks No. 13 on the 2024 CNBC FA 100 list. 
For example, a FICO score ranging 760 to 850 might qualify for a 6.226% annual percentage rate, according to Bankate.com. That can translate to a $1,842 monthly payment, Bankrate found.
On the other hand, a FICO score of 620-639 might get a 7.815% APR, roughly amounting to a $2,163 monthly mortgage payment, per Bankrate examples. They are based on national averages for a 30-year fixed mortgage loan of $300,000.
You can start the process by paying down any existing debts that you have on time and in full, and avoid new loans as you get closer to buying a home, experts say.

2. Start saving for the down payment

While a 20% down payment is not required to buy a house, buyers try to put more money upfront to avoid mortgage insurance costs and potentially lower monthly payments.
In the third quarter of the year, the average down payment was 14.5%, and a median of $30,300, Realtor.com told CNBC.
In order to start saving for a down payment, you need to figure out your cash flow, or how much money is coming in versus going out every month, said Steven LaRosa, director and senior portfolio manager at Edgemoor Investment Advisors based in Bethesda, Maryland. The firm ranks No. 14 on the 2024 CNBC FA 100 list.
Also, try to maximize how much money you can save or put away towards the down payment, said LaRosa.

3. Boost your emergency savings

It’s not just the down payment that needs to be built up, said Williams.
“You should have six months of your spending needs, including the house spending needs, in an emergency fund,” he said.
You don’t want to be in a situation where you use up all of your savings for the upfront costs of buying a house and end up with no cash left.
Home emergency spending was $1,667 across 1.5 projects per household in 2023, according to a report by Angi, an online marketplace for home improvement professionals.

3. Think about the lifestyle you want

Ask yourself what kind of lifestyle you look forward to, said Brady.
“Are you looking for a condo? Do you want a single-family home?” he said. 
Then you can focus on factors like location and price, said Brady. 
Meanwhile, some of the additional costs that come with owning a house are driven by where you live, like property taxes, utility and insurance costs, he said. 
In some areas, “it’s next to impossible” to get home insurance, said Brady. “And if you can [get home insurance] you’re paying quite a bit.”
Nearly three-quarters, or 70.3%, of Florida homeowners and 51% of California homeowners say they or the area they live in has been affected by rising home insurance costs or changes in coverage in the past year, according to Redfin, an online real estate brokerage firm.

5. Factor in other homeownership costs

Owning a home goes far beyond the monthly mortgage payment.
You need to factor in additional costs, experts say. 
To that point, the costs of homeownership adds up to an average $18,118 annually, or $1,510 a month, according to a report by Bankrate.com. The national figure includes the average costs of property taxes, homeowner’s insurance, and electricity, internet and cable bills. Maintenance was estimated at 2% a year of the home value.
“Those are very significant additions that sometimes people glance over and don’t put enough weight on,” said Cohn.
As such costs are unlikely to decline as time goes on, it’s important to have an emergency fund for homeownership costs, experts say.

6. How long you plan to stay in the house

“We like to use a five to seven year minimum,” said Cohn. The longer you’re in a house, the more likely the fixed costs will amortize, or pay off, over time, he said. 
Additionally, in the early years of the loan, you’re mostly paying the interest rate, and not the loan itself, experts say. 
“You’re not accumulating any equity from putting money into the mortgage in the first 5 to 7 years,” said Cohn.
“If you start looking at how much goes to principal and how much goes to interest in the first several years, it’s probably all interest,” said Brock. More

The tax extension deadline is Oct.15, but some taxpayers in federally declared disaster areas have more time to file.
For disasters after April 15, there is no extension for payments, and penalties and interest have been accruing.
If you still can’t pay your taxes, you have a few options, tax professionals say.

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The tax extension deadline has arrived and there are options if you still can’t pay your balance, tax experts say.
About 19 million U.S. taxpayers filed for an extension by the April 15 tax deadline, which bumped the filing due date to Oct. 15. But taxpayers affected by natural disasters may have even more time, with new deadlines ranging between Nov. 1 and as late as May 1, 2025, depending on location.

However, for federally declared disasters after April 15, filers were not granted more time to pay their tax bill. Penalties and interest on unpaid balances started accruing after the April 15 deadline.
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Many taxpayers wrongly assume that a tax extension provides more time to pay, experts say.
“That’s a surprise to a lot of people,” said Josh Youngblood, an enrolled agent and owner of The Youngblood Group, a Dallas-based tax firm. 
If you missed the tax deadline, the late payment penalty is 0.5% of your unpaid balance per month or partial month, capped at 25%. You will also incur interest on unpaid taxes.

By comparison, the failure-to-file penalty is 5% of unpaid taxes per month or partial month, up to 25%.

You have ‘various payment options’

The IRS has options if you can’t pay your taxes, “but you have to be current on your filing requirement,” said Tom O’Saben, an enrolled agent and director of tax content and government relations at the National Association of Tax Professionals.
After filing, there are “various payment options” online, and many filers will receive an immediate acceptance or rejection of payment plan requests without calling the IRS, according to the agency.
“If you owe less than $50,000, establishing a payment plan with the IRS is almost going to be automatic,” O’Saben said.

IRS online payment plans, or “installment agreements,” include:

Short-term payment plan: This may be an option if you owe less than $100,000, including tax, penalties and interest. You have up to 180 days to pay in full.
Long-term payment plan: This may be available if your balance is less than $50,000, including tax, penalties and interest. You must pay monthly, and you have up to 72 months to pay off the balance.

Although the late-payment penalty and interest will continue to accrue, an IRS payment plan could cut your late-payment fee in half while the agreement is in effect, according to the IRS.
One downside of IRS payment plans is future tax refunds could be used to offset your unpaid balance, O’Saben said.

‘Don’t ignore it because it won’t go away’

If you have unpaid taxes, you can expect notices from the IRS, and communication with the agency is key, experts say.
“Don’t ignore it because it won’t go away,” Youngblood said. “I’ve had clients come in, and they have a whole pile of unopened IRS letters.” 
“The IRS is not as bad as they think,” he added. “They actually want to work with people.”

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