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▣ An inherited IRA - now what?
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From a www.bankrate.com article, "So, if you think you might inherit an IRA from someone other than your spouse, such as an elderly parent, it's wise to do some advance planning if you can. According to Bonnie Hughes, CFP, your options for handling the account are a little trickier. In particular, there are some thorny rules regarding designating beneficiaries for IRAs.
In most cases, says Hughes, IRA beneficiaries should be actual, named people -- known as designated beneficiaries -- rather than simply "my estate" or "my living trust." Another no-no: leaving blank the space on the IRA beneficiary form (available from the financial institution that holds the account) in the mistaken assumption that the account automatically will be distributed to heirs as part of their will.
Why? "Trusts, estates and other entities don't have life expectancies," says Hughes. If they 'receive' an inherited IRA, they must draw down,and pay taxes on, the entire IRA account within five years or according to distribution plan of the original owner, if the owner had already begun taking distributions before his or her death, says Hughes."
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