Permalink Submitted by Alan - IRA critic on Thu, 2019-12-26 23:15
You can do it, but the grandchild will only have a 10 year stretch. And if the grandchild inherits while still a minor, th parents are on the hook for the kiddie tax since the inherited IRA distributions are treated as investment income of the grandchild. Of course, many grandchildren would blow through the inherited IRA in less than 10 years anyway. If you are concerned about that, you would have to leave their interest to a trust with a trustee having control of distributions from the trust. The IRA would still only last 10 years, but the grandchild would not necessarily have access to the entire balance in a short time.
Permalink Submitted by Alan - IRA critic on Thu, 2019-12-26 23:15
You can do it, but the grandchild will only have a 10 year stretch. And if the grandchild inherits while still a minor, th parents are on the hook for the kiddie tax since the inherited IRA distributions are treated as investment income of the grandchild. Of course, many grandchildren would blow through the inherited IRA in less than 10 years anyway. If you are concerned about that, you would have to leave their interest to a trust with a trustee having control of distributions from the trust. The IRA would still only last 10 years, but the grandchild would not necessarily have access to the entire balance in a short time.