Parent choices when selecting IRA beneficiary
Seems from reading items in the discussion forum, the most recommended handling of
an IRA to be inherited by a non-spouse such as children , from a parent, is to have the parent not make the IRA beneficiary a will or a trust. Seems this will give the chance to the children to stretch the IRA’s RMD over a long period of time since presumable the children might be many years younger than the parent and therefore the children could use their much longer life expectancy tables to stretch future IRA distributions after death of parent
Am I correct in this assumption? Does it matter if the IRA is a conventional IRA or a Roth IRA
Permalink Submitted by Alan - IRA critic on Thu, 2018-12-13 17:10
RMD amounts for non spouse inherited IRAs or Roth IRAs are the same. However, a beneficiary of a qualified trust is allowed to use the age of the oldest trust beneficiary to determine RMDs. If a minor child inherits an IRA, it is usually through an UTMA account and the minor would get a full life expectancy stretch. By far, the worst situation is when the owner’s estate inherits an IRA since the beneficiary under the will is not allowed to use their life expectancy. Either the 5 year rule or the decedent’s remaining life expectancy would be used.
Permalink Submitted by alberto vega on Fri, 2018-12-14 02:11
Thus, when a estate inherits an IRA from the person who died and that person did not specify a beneficiary,before death for the IRA in the IRA form , then the presumed beneficiary is determined otherwise and will have to use the 5 year rule or the decedent’s remaining life expectancy. Correct?
Permalink Submitted by Bruce Steiner on Fri, 2018-12-14 03:13