Designation of Beneficiary of IRA account
I’m filling out a designation of beneficiary form for my Morgan Stanley IRA and the form says
Naming my revocable trust as the beneficiary may affect my RMD distribution calculations and the tax deferred status of the funds at the time of my death.
I plan to list my wife as the primary beneficiary and my three adult children as contingent beneficiaries.
Any idea on what the RMD and tax ramifications would be?
Terry Says
A spousal beneficiary has different choices, and can either keep it as an inherited IRA or roll it into her own. A lot depends on when you die, and whether you have started taking RMDs at that point, and her age.
If she chooses to roll it into her own IRA, then the RMDs could be delayed if you haven’t started taking them.
Under current law, your adult children would have 10 years to distribute all of the IRA (again, depending on your status at your time of death).
Generally speaking, it’s best to name an individual as beneficiary — unless there are other reasons for not wanting this money to go directly to a possibly incompetent beneficiary.
