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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4501
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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What is the standard way that an inherited IRA is distributed

Resolved Question:

What is the standard way that an inherited IRA is distributed or divided with multiple beneficiaries?

Basically my aunt has an IRA with 100K and that has the trust as the beneficiary. On the trust when she dies the successor which is the financial company is supposed to divide all her assets up between 4 of us. They have said her accounts look good they just wanted to know on the IRA that sometimes having a trust listed is not a good idea and wanted to know if we should change it to list the 4 individual instead of the trust itself.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Lane :

HI,

Customer:

helo

Customer:

hello

Lane :

Yes I would recommend that, as well ... one of the reasons they may have mentioned is that when the owner name his children as beneficiaries directly —you avoidthe shortened payout period based on the oldest child’s life expectancy

Customer:

That is a little of where I am confused

Customer:

the whole pay out period thing

Customer:

I am 30 the oldest is 60

Lane :

Well, it has to do with not forcing out distributions

Lane :

OK Yepm, that's what thry're looking at

Customer:

So if she when she passes if all of us want to just take the cash out is that possible

Lane :

OH sure, that's another reason is control and being able to use as each beneficiary wishes

Lane :

DO you knew if the trust is revocable or irrevocable?

Customer:

Revocable

Customer:

I have it open now

Lane :

OK, that keeps is less complicate, but the same thing still applies.

Lane :

Look at this example:

Lane :

  • If a non-spouse beneficiary leaves your IRA right where it is, they become the owner but the IRA is now an “inherited” IRA. They can designate a beneficiary in case they die before withdrawing all the IRA funds, but any beneficiary will have to make withdrawals at your beneficiary’s rate. So, in other words, you name your 45-year-old daughter as beneficiary, you die, she names her 22-year-old son as her beneficiary, and upon her death he has to withdraw based on her actuarial life expectancy, not his own. She might have decided to move your IRA to another custodian; in that case she has an IRA that is both a “roll-over” and an “inherited” IRA.

Customer:

So it makes more sense to list each one of us and let us choose what we want

Customer:

This way if i decide to roll it over i dont get hit with my uncles age

Lane :

Exactly

Customer:

Ok i have it changed around lol thank you

Lane :

You're welcom... that'll be a win-win for everyone

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Customer:

cool gonna read it now thanks again

Lane :

YW :)

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4501
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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Lane
Lane
JD, MBA, CFP, CRPS
3637 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986