An individual retirement account is an investment that helps people save money for retirement. When an IRA holder passes away in Ohio, a beneficiary can take over the remaining assets in the fund. Choosing a beneficiary can be a difficult task for those who have no knowledge of estate planning.
When spouses inherit IRAs, they can transfer the accounts into their own names. If the beneficiaries are under the age of 70 and a half, they will not have to withdraw a required minimum distribution (RMD). The RMD is a minimum amount that the IRA owner must withdraw each year after reaching the age of 70 and a half.
Children, grandchildren or other beneficiaries can move the account into an inherited IRA. This type of IRA has tax-saving benefits. In addition to making a will, a testator should fill out the beneficiary designation form. This will enable their beneficiaries to take advantage of these benefits.
An estate can be the beneficiary of an IRA. The beneficiaries of the estate will have to take IRA distributions at the end of the fifth year. Some beneficiaries may not have tax-saving benefits.
Charities have a major advantage as beneficiaries of IRA assets. Charities receive these benefits tax-free. Also, the estate of the donor may receive a charitable deduction.
A trust can also be the beneficiary of an IRA. However, this will not lower taxes for people who inherit the IRA. Trusts are often set up for individuals who are unable to manage their assets, such as a minor.
Estate planning is a complex area of law. Therefore, people may want to seek the services of an estate planning attorney. The lawyer might be able to help choose the right individuals as beneficiaries of IRAs.