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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 looked up the article, and wow, that’s complicated. We have an estate attorney, a trust (that then flows into our daughter’s trust once we’re both gone), and a local fiduciary as the successor trustee, so she’ll have all the advice she needs.
If I’m understanding it correctly, a key variable that’s hard to predict is whether you/your spouse dies before RMDs are required. Once that happens, it seems like most decisions are already made. I guess if the surviving spouse disclaims the inherited IRA, that changes the time line a bit. But I wonder how many people are really in a position to do that. Makes my head hurt.
https://www.morningstar.com/personal-finance/ira-decision-that-affects-your-kids
Thank you for this post. Yes, the first sentence in my instructions to my family is to do nothing until they consult with a CPA.
How I wish Congress simplifies all these retirement vehicles into one: health, retirement, and education with an upfront tax exemption for contributions and everything else is tax free. Wrap it up with a catch-all estate tax.
David, I had the same thought as you while reading the article this morning, that Chrissy should get advice before making any changes.
I preferred to call the kids, ankle-biters, but I now realize the term puts them on the same level as Sophie the Wonder Cat😸