Wednesday, November 22, 2017
Spouses are usually the intended beneficiary of most retirement accounts. Eventually though, these accounts may be left to a non-spouse beneficiary. If a child inherits one of these accounts from a parent, there are a number of distribution options available to them. They may receive a lump sum, access funds at their leisure as long as the account is empty by the fifth tax year after their parent’s demise, or stretch distributions over their own life expectancy. If the stretch option is chosen, the beneficiary must receive the first distribution by December 31st of the year in which their parent passed away. The benefit of the stretch option is that funds may be left in account to grow as long as the child receives the minimum required distributions each year.
See Dan Moisand, What Your Kids Can Do When They Inherit Your Retirement Accounts, MarketWatch, September 9, 2017.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.