I have converted some of my IRA to a Roth IRA, which I want to leave to my grandchildren who are minors. What is the best way to do this?
Minors should not be named directly on the beneficiary form. They cannot sign the necessary paperwork to establish the inherited IRA, they cannot manage the investments, and they cannot request the required distributions (RMDs) each year. An intermediary needs to be named to act for the minors. The type of intermediary will depend on the size of the inheritance for the children. For a sizeable account, generally the best thing to do is to set up a trust for the minors and name the trust as the beneficiary of the IRA. All the beneficiaries of the trust will have to use the age of the oldest trust beneficiary for calculating RMDs. In the trust you can stipulate the age the beneficiaries must attain in order to have access to the inherited Roth IRA funds.
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