We are often asked about naming beneficiaries on an IRA. Should it be a person or a trust?

Bill does a lot of studying with Ed Slott–the IRA “guru” in this country.

It will probably be a living breathing person vs. a trust.  Individuals designated as beneficiaries of IRA can “stretch” out distributions over their lifetime.  For example, if you die and your children inherited your IRA, they could take out minimal distributions based on their life expectancy (and, essentially defer taxes for a long time). If a trust is the beneficiary, the IRA must be paid out within five years of your death.

However, there are special IRA trusts that can avoid this.  A special IRA trust must meet certain requirements so that an individual beneficiary (or beneficiaries) of the trust are treated as the designated beneficiaries of the IRA, thus preserving the “stretch”. These special IRA trusts are pretty common but do require additional legal work and expenses.

Recent Posts

How to regain control in a world of uncertainty

How to regain control in a world of uncertainty

It seems not a day goes by without us learning about a scary new event happening in the world. Inflation, markets down, wars…the list goes on. It’s understandable to feel overwhelmed by so many seemingly insurmountable challenges. It can feel as if we’ll never get through it. However, giving ourselves permission to let go of the things we can’t influence is exactly what can help us regain a sense of control in our lives. 

read more