There are some important changes in the Inherited IRA distribution rules that may affect your tax planning.

Before the SECURE Act of 2019, beneficiaries of inherited IRAs could “stretch” or spread out their withdrawals over their lifetime, which allowed them to lower their annual tax liability. However, under the new regulations of the SECURE Act, beneficiaries who are neither the spouse, a minor child, disabled, chronically ill, or certain trustees of the deceased must withdraw their inherited IRAs by the tenth year following the original account holder’s death.

In the recent Notice 2024-35, the IRS specified that beneficiaries who are subject to the 10-year rule are not required to make any distributions in 2024. This effectively suspends the excise tax for failing to take Required Minimum Distributions (RMDs) during this period for those beneficiaries subject to the 10-year rule. The waiver applies if the original account holder passed away in 2020, 2021, 2022, or 2023 and reached their required beginning date, typically April 1 of the year after the person turns 73.

This delay in mandatory distributions could provide tax planning opportunities for beneficiaries, allowing them to manage income more effectively and reduce overall tax liability for the year. If you are a beneficiary of an inherited IRA, we strongly recommend contacting KROST before withdrawing funds from the IRA. Coordinating with our Estate and Trust Experts and Wealth Manager could help you take advantage of this potential opportunity.

We understand that these changes may be complex, and we are here to help you navigate them. Please do not hesitate to reach out if you have any questions.

Note: Any changes to your estate plan must be drafted by your attorney.

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Our estate planning team assists with the transition of family wealth and estate succession. Our team of experts has over 90 years of combined experience working with family-owned and privately held companies, as well as high-net-worth individuals. Our primary goal is to assist individuals and their attorneys to effectively transfer wealth while minimizing unnecessary estate, gift, and generation-skipping taxes. In addition, we can coordinate all of your Trust, probate, and estate planning needs to ensure a smooth transition while minimizing emotional, tax, and administrative burdens.

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About the Experts

Douglas VenturelliDouglas A. Venturelli, Esq., Principal
TaxEstate & Trust, Gift and Probate, Sports & Entertainment
Douglas A. Venturelli is a Principal at KROST. He has over 45 years of experience in tax, estate, and business services. His main focus is federal estate and gift taxes. Doug consults with clients in the entertainment, legal, real estate, and medical industries. » Full Bio

Richard UmanoffRichard Umanoff, CPA, MBA , Principal
Tax, Estate & Trust, Gift and Probate
Richard Umanoff is a Principal at KROST. Richard’s career spans over 45 years, with a concentration in taxation. His primary emphasis is estate and trust tax compliance, planning, estate administration, and probate court accounting. Richard currently serves in the role of trustee for numerous clients. » Full Bio

So Sum Lee, CPA, PrincipalSo Sum Lee
Tax, Real Estate, Hospitality, Estate & Gift, Trust and Probate
So Sum Lee is a Tax Principal at KROST. So Sum has over 25 years of experience in public accounting and has a wide range of experience in Taxation, as well as servicing high-net-worth clients. So Sum’s area of expertise includes industries such as wholesale, real estate investments, and restaurants. » Full Bio

Kimberly Hoang, CPA, Senior Manager
Tax, Estate & Trust, Gift and Probate
Kimberly Hoang is a Senior Manager in the tax department at KROST. She has been in the public accounting profession for over four years. Her areas of focus include tax planning and compliance for small to medium-sized businesses – sole proprietorships, partnerships, corporations, and high-net-worth individuals. » Full Bio