TMTW #282- Inheriting an IRA: Not Dividing the IRA Among Heirs

Tax and Money Tip this Week:
Inheriting an IRA: Not Diving the IRA Among Heirs
April 27, 2016 | No. 282

Be sure to advise your beneficiaries to split the IRA, especially if they have a wide age difference. If the account is not split, the age of the oldest beneficiary will be used to calculate RMD’s which will shorten the number of years the money can grow tax deferred.

Say the beneficiaries are a 75 year old sister, a 50 year old son and a 20 year old grandchild. If the account remains whole, all the heirs will have to calculate their RMDs based on the 75 year old’s life expectancy. Instead, if the account is split by December 31 of the year following the year the owner dies, each beneficiary can use their own life expectancy to take RMDs—and can choose hoe to invest the money. “The distribution depends on age—the younger the beneficiaries are, the less they have to take out,” says Mike Piershale, president of Piershale Financial Group, in Crystal Lake, Illinois.

Source: Kiplinger’s Retirement Report

Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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