Reply to Beneficiaries for IRA: In children's names or in the name of the trust I have set up for them?

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Reply to "Beneficiaries for IRA: In children's names or in the name of the trust I have set up for them?"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Mine goes directly to my children because they could stretch distributions over their lifetime and avoid the 10-year distribution, which would cost more in taxes. [/quote]

ummm....when's the last time you reviewed that decision with an expert? because i think that rule changed in 2020, so your children will still be subject to the 10 year rule. You might want to look into that![/quote]

The last time I reviewed with an expert was in 2016, so thank you.  I will change it if it makes sense - worst case, they get it all at once and [b]have to spend it in 10 years.[/b]  I'm not rich or that old, so I'm not sure I want to spend money on advice and changes. [/quote]

This is really important and really important to teach your kids who will inherit from you: the rule is [i]not[/i] that the money has to be SPENT in ten years. You are not suddenly in "Brewster's Millions." The rule is that the money has to be [i]withdrawn from the favorable taxation treatment that it is accorded inside the IRA[/i] within ten years.

That can be done in increments or all in one go (as long as the beneficiaries are not subject to an RMD). But the money can then go in a savings or investment account--it does not have to be spent.

I hate to be pedantic about this, but this distinction could not be more important, especially if they end up getting access to this money while they are young. [/quote]

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