Ed Slott was named "The Best" source for IRA advice by The Wall Street Journal and called "America's IRA Expert" by Mutual Funds Magazine. He is a widely recognized professional speaker and educator specializing in retirement distribution planning, teaching both financial advisors and consumers how to best take advantage of our complicated tax code.

-- Have something you want to ask Ed? Send your questions to mailbag@irahelp.com

IRA expert Ed Slott answers readers’ questions about stretch IRAs for beneficiaries and required minimum distributions.

Question 1:

If I name my child as the beneficiary of my IRA, are they automatically able to stretch my inherited IRA account?


No. Under the tax code, the stretch IRA is the default option, but that doesn’t mean that every child beneficiary gets to stretch an IRA. Although many IRA custodians allow beneficiaries to stretch distributions, some custodians impose their own more restrictive rules such as mandatory withdrawal of the entire inherited account within five years. Make sure you check with your IRA custodian(s) to find out what their specific policies are.

Question 2:

If I named a trust as my beneficiary when I lived in one state and have since moved to another state, do I need a new trust?


You may not need a new trust, but there are a number of rules that vary from state to state, so you should probably consult with a qualified estate planning attorney in the new state to see if any changes to your trust should be made.  Differences in the rules between the two states may include state estate taxes, the level, if any, of creditor protection your IRA has and the definition of how much of your inherited IRA distributions will be considered principal and how much will be considered income.

Question 3:

I will be 70 ½ this year and am still working and contributing to my 401(k). What required distributions will I have to take this year?


You will have to take required minimum distributions (RMDs) from any IRAs (including SEPs and SIMPLEs even if you were still working for the company that sponsors the plan) that you have and from any plans of employers that you are no longer employed by as of this date.  There is an exception to the RMD rules for employer plans such as 401(k)s and 403(b)s if you are still working for that employer.  If you are not a 5% or more owner of the company and if the plan allows, you can delay taking RMDs until you separate from service.  Once you separate from service, you have a required distribution for the year of separation.

You can defer taking that distribution until April 1 of the following year but you would then have to take the RMD for that year also by the end of the year.  So you would end up having to take two distributions in one year.  If you want to roll your employer plan funds over to an IRA, you will have to take any undistributed RMDs before you can roll the balance of the plan funds to an IRA.

-- Have something you want to ask Ed? Send your questions to mailbag@irahelp.com