Planning strategies for inherited IRA withdrawals

Article Abstract:

Beneficiaries of inherited independent retirement accounts (IRAs) can optimize the taxless compounding of investment earnings through an approach that involves deferring IRA distributions for as long as possible. The Code limits the deferral period but provides beneficiaries options to choose from. For a decedent who dies before the required starting data, a designated beneficiary who is not a spouse can either receive the balance in the owner's IRA account within five years of death or do so over a period not surpassing the life expectancy of the beneficiary. A surviving spouse has options aside from these. He or she may receive the full distribution within five years, start getting distributions in the year the decedent would have been 70.5 years of age or choose to treat the IRA as his or her own. The most beneficial option is the one that can defer or minimize the tax liability.

Inheritance and succession

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How to handle the new rules on required and corrective plan distributions

Article Abstract:

The Technical and Miscellaneous Revenue Act of 1988 made changes to how required and corrective plan distributions are reported. Regulations regarding excess deferrals, excess contributions, and reporting requirements are explained.

Laws, regulations and rules, Accounting, Employee benefits

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