IRA beneficiary rules for RMD
I am 89 years old> I have 2 daughters age 61 and 63. Each one is a beneficiary of an IRA worth almost $800,000. They are going to inherited other funds as well . When I die I don’t want them to blow their Ira and I would like the to receive just about $3000/ months from their share of IRA (each).
I have 2 more questions about IRA and I will submit them to you with your permission after I received answer to this question.
Respectfully yours,
Mansour Khademi
Permalink Submitted by Norman Cook on Tue, 2022-11-15 17:33
I think the only way is to set up a trust as the beneficiary of the IRA and the girls as beneficiary of the trust.
Permalink Submitted by Alan - IRA critic on Tue, 2022-11-15 19:40
Yes, a trust beneficiary is needed if distributions are to be limited. They or the trust will be subject to annual RMDs starting in the year after they or the trust inherits the IRA, but also the 10 year rule, meaning that the IRA must be drained 10 years after you pass. If the IRA will be drained somewhat equally over these 10 years, the amount distributed to the trust will have to be much more than just the RMD. If such amounts in excess of 36k per year are accumulated in the trust, these amounts will be subject to a tax rate that is likely to be far more than their individual marginal rates. Of course, you will also need to determine who the trustee of these trusts would be, they may command a fee, and the trust will have to file a 1041 annually. Spendthrift control is typically needed for age 20 something beneficiaries, not for children in their 60s, but of course there are always exceptions.