Diane, a widow, owns a traditional IRA. Diane is 60 years old and has three children: Joe 29, Sally 20, and Ken 2. Diane also does not plan or retiring any time soon. Therefore, she wants to leave her traditional IRA to one of her children, but she is not sure which one. Please answer the following questions from Diane:

1. Which beneficiary should Diane select if she would like to leave the IRA to the beneficiary that will have the best tax consequences? Why or why not? Which beneficiary would have the worst tax consequences?

• What if Joe has a chronic illness?

Does Diane need to specify her designated beneficiary by name? What are the tax consequences for her eventual beneficiary if she does not designate a beneficiary for her IRA?

Answer rating: 100% (QA)

Beneficiary selection If you want to leave the IRA to the beneficiary with the best tax consequences ... View the full answer