I have a new question, sort of, and thought I would start a new thread to ask it. Assume somehow my two children coordinate and satisfy the Vanguard gauntlet and they both end up with an inherited Roth. So on those inherited accounts, they specify their own beneficiaries.
Then in year three, my daughter dies. She still had seven more years before the Roth she inherited from me had to be distributed. Lets say her beneficiary on that inherited Roth is her husband. Would he get to run out the remaining seven years of tax free growth on the Roth or would a full distribution of be forced on him at the time of his spousal inheritance?
Anybody have any experience with this sort of thing? I don’t think there is anything I can do about that in my will but just for advice and planning info I can give my daughter .
On an inherited IRA, the original beneficiaries can’t be changed, so, your grandchildren would inherit.
Unless, of course, your daughter empties the IRA account, which, as primary beneficiary, she could do.
If she names her husband as primary beneficiary on all her accounts, it would be with the understanding that he would provide for their children, and not fall prey to a gold digger who’d kick them to the curb.
If you don’t share her confidence, ask your lawyer what if anything can be done about that.
bighairymike: "I have a new question, sort of, and thought I would start a new thread to ask it. Assume somehow my two children coordinate and satisfy the Vanguard gauntlet and they both end up with an inherited Roth. So on those inherited accounts, they specify their own beneficiaries.
Then in year three, my daughter dies. She still had seven more years before the Roth she inherited from me had to be distributed. Lets say her beneficiary on that inherited Roth is her husband. Would he get to run out the remaining seven years of tax free growth on the Roth or would a full distribution of be forced on him at the time of his spousal inheritance?"
I have no direct experience and am not an accountant, but Michael Kitces writes:
“For scenario 3, Successor Beneficiaries who inherit from post-SECURE Act Non-Eligible Designated Beneficiaries are, like other Successor Beneficiaries, subject to the 10-Year Rule; however, unlike other Success Beneficiaries, they will not have their ‘own’ 10-Year timeframe. Instead, their distribution period is a continuation of the 10-Year period that started when the Successor Beneficiary inherited the account.”