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Old 12-30-2016, 01:29 PM
 
Location: Alaska
5,356 posts, read 16,352,909 times
Reputation: 4024

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Quote:
Originally Posted by tasmtairy View Post
Okay, I read that, but what about 2 beneficiaries equal, myself and my brother. Just take the distribution on the five year plan and split it? I would be doing all the paperwork and dealings with all properties.
Your broker should split the assets equally and transfer them to beneficiary accounts for each of you. You can then determine what method you want to make the required withdrawals. All you'll need to do is send them a death certificate (probably fill out a form too), and they'll follow the instructions they were given for beneficiaries.
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Old 12-30-2016, 01:33 PM
 
Location: Alaska
5,356 posts, read 16,352,909 times
Reputation: 4024
Quote:
Originally Posted by FiveLoaves View Post
Thank you very much for that explanation. So it is not a good idea to name my daughter as a beneficiary on my IRA, correct ?? I currently have DW as 100% Beneficiary on both my T-IRA and Rollover IRA. I'll leave that as is.

In the event of my demise, can DW just roll it into her IRA without any Tax consequences until her RMD's start ??

How would the Tax Man treat an Inherited Roth account ??
The Original Owner (me) can be withdrawn Tax-Free. If it's inherited.......is it taxed as Ordinary Income ??

Thanks again for your help with this. One of my Year-End goals is to check all the Beneficiaries.
I would designate a secondary beneficiary for your IRAs. There's always a chance you could both go in an accident and they would end up going through probate costing your heirs $$$.
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Old 12-30-2016, 05:28 PM
 
Location: Charleston, SC
1,362 posts, read 768,419 times
Reputation: 2428
Yes I will make sure DD is the second Beneficiary on those IRA's. I'm pretty sure I set it like that way back when, but part of this exercise is to make sure it's correct from tax standpoint.

And I rather like the idea of making DD the Primary on the Roth, since it would go to her tax-free. She's earning income, and this would not push her into a higher tax bracket.

Thanks for all the good advice folks.........This is why I love this place.
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Old 12-31-2016, 12:25 AM
 
6,216 posts, read 2,874,385 times
Reputation: 15743
Blessings to you for considering your DD for this capital venture.

I was a bene and an executor to my mothers estate. Her Roth account Holder IS a Nightmare. Four years later and many term changes have halted the distribution and liquidation of her funds. Why? Because the Titling of transfer of ownership is meant for someone with a doctorate degree in physics. They have rules that are set to impede these funds from ever being touched. ANd the sweet kicker is, in two more years it will be declared an "abandoned" account. My state will get to lay claims to it. All because a very high profile Investment company knows how to retain equity when the original holder passes away. My SIL actually works for one of their subsidiaries and attempted to fill out the paperwork ( 14 pages) . It was declined.

I sent certified mail her death certificate and the paperwork involving the names of the Beneficiaries. I had paperwork notarized for each claimant.

Liquidate the money, put it in cd's. These retirement funds are a nightmare for the living Benefactors. .
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Old 12-31-2016, 05:10 AM
 
14,263 posts, read 24,004,620 times
Reputation: 20084
Quote:
Originally Posted by boater1 View Post
Be advised

The "Stretch IRA" is being looked at to be eliminated next year.
No plans yet, but it's in the cross hairs

A way to get the taxes due on that IRA paid now, rather than over a young person's life.


If you start basing financial decisions on "what is being looked to be eliminated next year", you will make NO tax decisions as MOST deductions and credits are slated to be eliminated by one of the hundreds/ thousands of tax proposals made by the 535 members of Congress and the thousands of state legislators. Most of these never see the light of day.
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Old 12-31-2016, 10:38 AM
 
Location: Forests of Maine
30,687 posts, read 49,469,539 times
Reputation: 19134
My Dw is the beneficiary of an inherited 401{k} this year. They [Fidelity] rolled it over into an 'inherited-IRA'. As was explained to us, she could:
1- make it her own IRA,
2- or withdraw all of the funds, in a lump or divided out over the next 5 years.
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Old 12-31-2016, 10:48 AM
 
Location: Mayberry
32,064 posts, read 13,095,660 times
Reputation: 68573
Quote:
Originally Posted by akck View Post
Your broker should split the assets equally and transfer them to beneficiary accounts for each of you. You can then determine what method you want to make the required withdrawals. All you'll need to do is send them a death certificate (probably fill out a form too), and they'll follow the instructions they were given for beneficiaries.
Thank you!!
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Old 12-31-2016, 12:31 PM
 
Location: Phoenix, AZ > Raleigh, NC
15,079 posts, read 19,030,481 times
Reputation: 24192
Quote:
Originally Posted by cruisetheworld View Post
Non Spouse inherited IRA's (your daughter) cannot make the IRA her own. IRS rules stipulate that she must begin withdrawing the money by Dec. 31 of the next year following the death of the original account owner. ( Example...Owner dies today Dec. 30, 2016. Beneficiary must take first distribution by Dec. 31, 2017).

There are currently 3 different options for a non spouse to withdraw the money from an inherited IRA.

1) Withdraw and liquidate the money all at once. This may be feasible if the amount is small or if the beneficiary has an urgent need for the money. This is usually the WORST option from a tax perspective as all withdrawn money is taxed at ordinary income rates. (If the fund is a Trad. IRA...if it is a ROTH then the money is NOT taxed when distributions are taken).

2) Utilize the 5 year rule as it pertains to withdrawals. All funds must be withdrawn within a 5 year period. NOTE: The money does not need to be withdrawn in equal amounts over 5 years. The beneficiary can decide to withdraw a different % in each year or withdraw the entire amount in year 5. Again, if this is a Trad. IRA.....withdrawals are subject to ordinary income tax rates.

3) The best option, especially for large balances, is withdrawing the money over the beneficiary's lifetime using the single life expectancy table provided by the IRS. This is commonly referred to as a "stretch IRA." This means that each year an ever increasing % is withdrawn until the money is exhausted. If the beneficiary dies before then, the remaining balance becomes part of the beneficiary's estate and passes to his/her heirs and the process begins again.

If the IRA is held by one of the large brokerage houses....i.e. Fidelity , they are very aware on how to properly title the account to reflect that it is an inherited IRA. They will then ask your daughter to choose an option for future withdrawals. Not really a complicated process.
This is MOSTLY accurate. There are some differences dependent on whether the owner of the IRA (dad) has begun taking distributions.

Personally, if this is a large IRA, there's no way in hell I'd take the advice of Fidelity. Estate Planning lawyer time.

And definitely designate alternate beneficiaries.
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Old 12-31-2016, 02:41 PM
 
1,190 posts, read 665,070 times
Reputation: 4129
Quote:
Originally Posted by Nov3 View Post
Blessings to you for considering your DD for this capital venture.

I was a bene and an executor to my mothers estate. Her Roth account Holder IS a Nightmare. Four years later and many term changes have halted the distribution and liquidation of her funds. Why? Because the Titling of transfer of ownership is meant for someone with a doctorate degree in physics. They have rules that are set to impede these funds from ever being touched. ANd the sweet kicker is, in two more years it will be declared an "abandoned" account. My state will get to lay claims to it. All because a very high profile Investment company knows how to retain equity when the original holder passes away. My SIL actually works for one of their subsidiaries and attempted to fill out the paperwork ( 14 pages) . It was declined.

I sent certified mail her death certificate and the paperwork involving the names of the Beneficiaries. I had paperwork notarized for each claimant.

Liquidate the money, put it in cd's. These retirement funds are a nightmare for the living Benefactors. .
This is insane! Have you hired an estate lawyer? They make everything so much easier if you hire a good one and have that one contact to explain and file items for you. We found the fee well worth it plus we wanted to be sure we were not making irreversible mistakes, even though we had done extensive research ourselves.
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Old 12-31-2016, 04:23 PM
 
Location: Former LI'er Now Rehoboth Beach, DE
7,880 posts, read 10,572,917 times
Reputation: 7973
My sibling and I each inherited 1/2 of my Dad's IRA. We both had to begin withdrawals by the following year as previously stated. We are using single life expectancy chart. I believe, that one of the proposals out there, is to allow those already taking withdrawals to continue but for those who have not yet begun the withdrawals, those must be at the quicker pace.
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