f your children inherit your retirement accounts, they will have a few options about what to do with them.
Most people designate their spouses as the beneficiaries of their retirement accounts after they pass away. Consequently, the surviving spouse then becomes the owner of the accounts and can use the account in the same way that the deceased spouse did.
However, sometimes people name non-spouse beneficiaries, such as their children or the children end up receiving the accounts after the designated spouse passes away.
What the children can do with the accounts is not as simple as it is for spouses. However, there are a few options.
The Wills, Trusts & Estates Prof Blog discusses some of these options in "What Your Kids Can Do When They Inherit Your Retirement Accounts."
The options include:
- The assets in the account can be taken out immediately as one lump sum.
- The assets in the account can be taken out whenever needed, as long as the account is empty within five years.
- The children can choose to stretch the account out over their own expected lifetimes. However, they will need to make annual required minimum distributions and must take the first one by a set time.
If you have questions about your retirement accounts and your heirs, then talk to an estate planning attorney to get answers. While you are at it, learn more about how your retirement accounts can be used as part of an overall estate plan.
Reference: Wills, Trusts & Estates Prof Blog (Nov. 22, 2017) "What Your Kids Can Do When They Inherit Your Retirement Accounts."
Suggested Key Words: Estate Planning, Inheritance