Ask Ed Slott: Dissecting a Complicated IRA; and Primary Beneficiary Woes

[habelow]

Husband with large IRA, age 80+, second marriage, wife age 66. Upon death, husband wishes all income from IRA to second wife. At wife's death, IRA principal to Husband's family of neices (no children). Question: how to set-up Beneficiary Designation for IRA?

[Bradly T.]

Looking forward to Ed's far more definitive and expert advice but a couple of strategies to consider: first, husband can divide IRA between two custodians with spouse as bennie on one and kids as bennie on other. Kids don't have to wait for step-mom's death to inherit and enjoy RMDs sooner rather than later. Husband could carve out an amount, that when annuitized to single life payout for spouse, approximated the income only from total IRA balance - her current RMD is around 3.5% (3.65% @ age 70.5). Only my annuity custodians allow complex beneficiary arrangements, perhaps another alternative.