Legal Blog

The Weekly Scenario: Getting The Most From An IRA

Question: I’m one of four beneficiaries (and the youngest sibling) named to inherit my father’s IRA. How would I get the most ‘stretch’ from the IRA?

Answer:  The goal here would be to get the maximum stretch possible and since you are the youngest named beneficiary, it would be best if the payout were based on your life expectancy.

Generally, if there are multiple beneficiaries inheriting an IRA, in order to use each beneficiary’s own life expectancy, a separate share accounting must be done in calculating required minimum distributions. This will ensure each individual beneficiary will have the longest payout period possible. A separate accounting means that the account should be split by the IRA custodian into separate inherited IRA shares. There is a deadline for establishing separate shares which is the end of the year following the year of the account owner’s death.

Comment: If the deadline is not met, all beneficiaries will be forced to use the life expectancy of the oldest of the beneficiaries. While in a lot of situations, this may not reduce the benefits significantly, in some cases (such as where one of the beneficiaries is much older than the others or is even a charity), the payout could be significantly affected.

 

As always, if you have any questions or would like to learn more, please contact Steve Shane at sshane@offitkurman.com or 301.575.0313.

ABOUT STEVE SHANE

Steve Shane Casual Small

sshane@offitkurman.com | 301.575.0313

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 140 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our eleven offices serve individual and corporate clients in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City regions. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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