IRA distributions

Submitted by Michael Eastham on Mon, 2017-08-28 16:59

Mary’s husband, Dan passed away a few years ago and he had Mary as the beneficiary of his $200k IRA. However, in his Will, he stated that he wanted $100k to go to each of his 2 children (from a previous marriage), once they reach age 50. One will reach 50 later this year and the other next year.
Is there any way for Mary to avoid tax on the distribution or do a rollover into a bene IRA for the children?
I’m guessing no, but I thought it doesn’t hurt to ask.
Thanks



Submitted by Alan - IRA critic on Mon, 2017-08-28 17:24

Your guess is correct. If the IRA is the only asset remaining, all that could be done is Mary taking a taxable IRA distribution and giving a tax adjusted amount to each child annually that would probably be under the annual gift exclusion amount of 14k. 

Submitted by [email protected] on Mon, 2017-08-28 21:57

I would imagine this all assumes Mary is in agreement.  She would not be obligated in any way to give them anything.  The will would not have any say over the proceeds of the IRA, correct?

Submitted by Alan - IRA critic on Mon, 2017-08-28 23:25

Yes, I assumed Mary wanted to do this, however she is not under any legal obligation to share any of the inherited IRA funds, particularly if it leaves her with no inheritance.

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