An IRA Trust can help you control distributions after you pass away and restrict access to beneficiaries who might squander the funds of your IRA. How does an IRA Trust accomplish this? Let’s say your IRA is left directly to your beneficiaries outside of a trust. In this situation, your beneficiaries can immediately cash out your IRA and spend the money however they choose. The trouble is, when the IRA is cashed out, not only is the ability to stretch the required minimum distributions (RMDs) over the beneficiary’s lifetime lost, but all of the amount withdrawn will be taxable in the withdrawal year.
The Benefits of Putting Your IRA Into a Trust
Blog Posts, Estate Planning
Excerpt
An IRA Trust can help you control distributions after you pass away and restrict access to beneficiaries who might squander the funds of your IRA. How does an IRA Trust accomplish this? Let’s say your IRA is left directly to your beneficiaries outside of a trust. In this situation, your beneficiaries can immediately cash out your IRA and spend the money however they choose. The trouble is, when the IRA is cashed out, not only is the ability to stretch the required minimum distributions (RMDs) over the beneficiary’s lifetime lost, but all of the amount withdrawn will be taxable in the withdrawal year.
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