Roth IRA Bene. Minors
Hello. Have a single dad with a Roth IRA. Going to list 2 boys (ages 13 and under) as primary beneficiaries. If client wakes up on a cloud, do boys have to start taking a RMD, and will they be required to have a guardian for their Roth IRA accounts so they can’t cash in and buy a corvette at age 16? Thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2016-06-02 22:04
Yes, there is usually a minor’s beneficiary provision in the IRA agreement outlining the requirements or options. The financial guardian or responsible person for each boy might establish a separate inherited Roth IRA and beneficiary RMDs must begin no later than the end of the year following Dad’s death. The RMDs could be paid into an UTMA account per state regulations, so the boys could not cash out the Roth before the age of majority. If the amount in this Roth warrants the expense of a trust and Dad wants to provide spendthrift protection beyond the age of majority, Dad could name a child’s trust as the Roth beneficiary, but the trust should be qualified for look through treatment or the Roth would have to be drained in 5 years.