|
Q.Why Your IRA and its named Beneficiary May Require Your Immediate Attention?
A.You may have named an IRA beneficiary many years ago when you opened the account. Your named beneficiary should be reviewed periodically, since a named IRA beneficiary will override an conflicting provision set forth in a will.
If you have named your surviving spouse as the beneficiary, the spouse can make a tax-free rollover of your IRA into his or her own IRA. Distributions from surviving spouse’s IRA account will be taxed at your spouse's tax rate and the required minimum distributions will be determined based on the IRA account balance and your surviving spouse’s age.
If you have named your child(ren) or grandchild(ren) as beneficiary, your IRA will provide them with a lifelong stream of income. The inherited IRA can continue to grow tax-deferred for their estimated lifetime, and the minimum required distribution (which begins immediately regardless of the child(ren)’s age are based on the account balance of the IRA and the age f your child(ren). All distributions are exempt from the ten percent (10%) premature distribution penalty, as there can be no premature distribution.
If you name your child(ren) and she or he has not reached the age of majority (18 to 21 depending on your state), a trusted custodian must be designated for the child, or else the local probate court will appoint someone to manage the IRA account on behalf of the child(ren).
IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained on this web site is not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed on a taxpayer under the U.S. Internal Revenue Service.
|
