Expert: John Kirk, CPA Date: 7/24/2008 Subject: beneficiary choice for an IRA
Question QUESTION: Hi - Can you suggest what would be the correct way to list the beneficiary for my IRA given that I would like it to go to my kids, who are also the only people named in my trust.
I would like to avoid taxes and would prefer that they have the opportunity to have "inherited IRA's" after my death.
So should my trust be named, or should my kids be named individually?
That's the question.
Thanks for any help you can offer!
ANSWER: Name your trust as the beneficiary, that way minimum distributions are determined on the life of the youngest.
John Kirk, CPA
www.johnkirkcpa.com
---------- FOLLOW-UP ----------
QUESTION: Thank you.
- Does that mean that my IRA would stay the same, in my name, but my kids would get distributions from it?
- Also, if I did leave it in their individual names, would they have to take a lump sum distribution or could they still have an inherited IRA?
Answer The IRA stays the same, just change the beneficiary to the Trust. The children are than the beneficiaries of the IRA and the Required Minimum Distribution rules determine how much is required to be distributed to each beneficiary based on the youngest child's life expectancy.
The IRA must distribute to the trust the minimum amount as computed using the RMD rules.
