roll over IRA

Submitted by gautam shah on Sun, 2024-01-21 13:58

I have roll over IRA combination of previous PENSION 401 403 ACCOUNTS. IF i name my grandkids to be beneficiary what will happen when i die? what rules they have to follow? also can i split my IRA account into beneficiaries my wife my children and grandchildren by percentages for each?



Submitted by gautam shah on Sun, 2024-01-21 14:01

I am taking RMD how can i best acheive to continue when i pass away my spouse can take RMD and pass account to my grandchildren to take RMD

Submitted by gautam shah on Sun, 2024-01-21 14:03

IF i name my children or grandchildren as beneficiaries what rules they have to follow for withdrawal and tax consequances? if they are minor what will happen?

Submitted by Alan - IRA critic on Sun, 2024-01-21 15:11

  • You can name anyone you wish as beneficiary. When you pass, if you have not completed that year’s RMD, the beneficiaries will have to complete it in any combination between the beneficiaries. But first, they should each be sure to establish separate inherited IRA accounts no later than the end of the year after the year of your death.
  • If your wife is over 59.5, she should elect to assume ownership of her inherited IRA as her RMDs will be lower because the Uniform table will apply.
  • Your children and grandchildren will be subject to the 10 year rule unless disabled or chronically ill at your death. SInce you will have passed after your RMDs began, the children and grandchildren will have to take annual RMDs in years 1-9 of the 10 year rule period. This applies to all grandchildren, and I assume that your children are no longer minors. 
  • You can of course leave your entire IRA to your spouse, who can then name her own beneficiaries after your death, or leave your IRA to your spouse and children, assuming that your children will name your grandchildren as their beneficiaries. Or you could set up additional IRA accounts with different beneficiaries if you wished. Brokerage IRAs are generally easier for beneficiaries to handle than insurance company or bank held IRA products. 
  • If your wife assumes ownership of her inherited IRA, she could do later rollovers if needed. But the non spouse beneficiaries can only move their inherited accounts by direct transfer. They cannot do a 60 day rollover of any distribution. 

Submitted by gautam shah on Sun, 2024-01-21 15:21

thank you for detail response. currantly my grandchildren are minor. me and my wife are ove 70 years. my adult children are well set and responsible. i wish as i take on only RMD  my wife will do same and how to ensure my grandkids will continues same till require by law to take full final distribution. also what are rules for my roth ira?

Submitted by Alan - IRA critic on Sun, 2024-01-21 15:34

  • Your grandchildren are subject to the same 10 year rule as your non minor children. The 10 year rule can be delayed for your minor children, but yours are no longer minors. Only your wife can avoid the 10 year rule and she should elect to assume ownership of her inherited IRA after she first establishes the separate inherited IRA. 
  • You have no RMDs for your Roth IRA. If your wife inherits it and at least 5 years have passed since the year of your first Roth IRA contribution, your wife can assume ownership, continue to avoid RMDs, and the Roth will be tax free (qualified). Non spouse beneficiaries of your Roth IRA will be subject to the 10 year rule, but unlike traditional IRAs, there are no annual RMDs in years 1-9, just the full distribution required in year 10.

Submitted by gautam shah on Sun, 2024-01-21 17:30

Thank you for your clarification. how to minimise estate tax upon transfer  of IRA and ROTH IRA after second death. assume one of us survives next 15-20 years and life time exemption goes down from 10 million per person at second death 50 percent may go in taxes. any solution 

Submitted by Alan - IRA critic on Sun, 2024-01-21 18:24

  • The individual unified credit for 2024 is 13.6 million, but consider the benefit of portability of the unused exemption of the deceased spouse below:
  • The Power of Portability In Estate Planning For Married Couples | KPM (kpmcpa.com)
  • Monitor the results of the revised unified credit starting in 2026. It could drop as much as 50%. For more details consult an estate attorney, as this forum does not deal with estate tax issues.

Submitted by gautam shah on Mon, 2024-01-22 11:57

thank you. very good information on portability of remaining tax credit.

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