NewsFarrell Fritz Trusts & Estates partner Neil V. Carbone was recently featured in MarketWatch’s column The Moneyist, offering clarity on one of the most complex areas of estate planning: inherited retirement assets under the SECURE 2.0 Act.
In the column, Neil breaks down key considerations for beneficiaries — from required minimum distributions and the 10-year rule to the significant tax implications of missed withdrawals. His guidance helps heirs understand their options and avoid costly missteps when navigating inherited IRAs.
From the article:
Inherited retirement assets under the Secure 2.0 Act are fairly complex, says Neil V. Carbone, trusts-and-estates partner at law firm Farrell Fritz. The options for beneficiaries depend on the beneficiary’s relationship to the original account owner and whether the beneficiary qualifies as an “eligible designated beneficiary” (which does not apply in this case), among other factors like whether the owner had started their RMDs.
“Failure to take an RMD could result in a substantial excise tax of 25% of the amount of the missed distribution, but that can be reduced to 10% if corrected within two years,” Carbone says. “Of course, the beneficiaries could take one or more lump-sum distributions while they are still in college and presumably have little or no other income. This approach could avoid pushing them into a higher income-tax bracket.”
Read the full column on MarketWatch to learn more about Neil’s perspective on beneficiary decision-making and proactive estate planning here: My college-age kids inherited $300K from a 401(k). What should they do with this money? – MarketWatch
