@fanfare
@mjc4maureen
Indeed, I’m just an idiot you’ve never met and I’m not responsible for millions of dollars in IRAs.
Regarding account withdrawals. Once the beneficiary makes a withdrawal and pays the income tax on it, it becomes indistinguishable from any other money in their possession. They could re-contribute it to an IRA in their own name (if they had compensation from working that would allow an IRA contribution, and up to the $6000 per year limit); or they could invest it in a brokerage account where they would be subject all of the usual rules on reporting capital gains, interest, and dividends; or they could buy a Ferrari. Once the tax is paid, it’s all just money.
And of course, if they take 10% out for the first three years, they will probably have more than 70% of the original balance left over, because of growth of the remaining balance in the meantime (unless the stock market is in the tank again).
Certainly, if you established a trust account for each of your minor grandchildren and designated the trust account as the IRA beneficiary, you could ensure that they only had supervised and limited access to the money when they turned 18 and full unsupervised access at a later age when they might be slightly more financially responsible.
Regarding your estate. Generally speaking, any money that you earn after the date of your death is paid to your estate, not you. Your final tax return form 1040 can be filed by your executor, but only covers income paid to you up to the date of your death. Income paid to your estate would be reported on a form 1041 estate tax return. How much tax your estate pays is something that I am not qualified to begin to discuss, although generally yes, you would not be subject to an additional estate tax unless your estate plus your lifetime gifts on form 709 exceeded the exclusion, which is currently between $11 and $12 million.
