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Survivors

The new minimum distribution rules provide great new opportunities for estate planning actually done after death that can potentially save huge amounts of taxes. The key is that the proper beneficiary designation must be in place prior to death before these tax-saving decisions can be made after death. Two essential dates to remember are September 30th and October 31st. Following the death of the owner of the IRA, a beneficiary does not have to be officially designated until September 30th of the year after the death of the IRA owner. October 31st is the date by which documentation pertaining to individual beneficiaries of a trust must be provided to the custodian of the IRA.

If you are a surviving spouse named as the beneficiary, you can roll the IRA into your own IRA and prolong the payout of the IRA with tax deferral over your lifetime. At your death, your children or grandchildren, if they are listed as beneficiaries, can then spread out the payments from the IRA over their individual lifetimes for further compounded tax savings. The money gets to either continue growing tax deferred or, in the case of a Roth IRA, tax free for potentially many more years.


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