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How your spouse handles an inherited IRA can shorten—or extend—your children’s tax-deferred growth.
I read, but did not comprehend the article (link below) which I received from Morningstar this morning, but think it may be of value to others.
Bottom line for me is I will inform my wife this morning that after my death she should not do anything with my traditional IRA until she discusses this issue with our estate attorney.
PS Does anyone else despise the term Kids as my wife and I do? Our progeny are children, not the byproduct of goats.
https://www.morningstar.com/personal-finance/ira-decision-that-affects-your-kids?utm_source=eloqua&utm_medium=email&utm_campaign=MorningDigest&utm_content=None_73639&utm_id=38375
I had thought when the kid inherit an ira they can take distributions over 10yrs
we are both taking rmds now. age 76,75
am I wrong
I don’t think so.
I am more than a little surprised by how many believe punting this to an estate attorney will provide your heirs with the advice they need to make the best financial decisions with inherited IRAs? Unfortunately, I have now gone through this scenario from several very unimaginable angles and I can tell you that I have yet to talk to an estate attorney (of which I have talked to four) who can provide any form of good IRA advice. That is not what they do! They provide a legal structure and the hopefully the enforcement of that structure for your assets. Not tax and or investment advice. Frankly, they could care less about the assets, except that they can get paid. CPA’s have more experience but here again I have experienced a very wide range of knowledge and received some very poor advice more than once. Fortunately, I did not accept their answers and kept asking questions, doing more research, and found a very good CPA, eventually. Talk to your CPAs now and run through scenarios that pertain to you and determine if they can respond? Hopefully, you have a partner who WILL NOT accept the easy answer – especially if they are on the young side (< 67) or on the old side (>80) with heirs that may be involved in some of the decisions and who will eventually inherit the IRA. Can your CPA answer: What is a BDA IRA? What is a good example of when a spouse should do a BDA IRA? When might it be an advantage for heirs? If they don’t know what a BDA IRA is or can’t answer quickly the advantages of a BDA IRA, run! If they immediately say, “You should never do that, your partner should roll it into their IRA,” without at least preferencing your and your partner’s ages and/or asking you more questions about your partner’s tax rate after your death and your heirs potential needs, Run! Please consider thinking of this seriously before your death so that your partner and heirs aren’t at the mercy of attorneys and CPAs who do not have sufficient IRA tax and financial planning experience.
Children yes