IRA Inheritance Planning in Washington, DC
IRA Inheritance Planning in Washington, DC
Make Sure Your Retirement Savings Reach the Right People, With Less Lost to Taxes
Your IRA may be one of the largest assets you leave behind, yet it does not pass under your will. It passes under a beneficiary designation that may not have been reviewed in years, and once it is inherited, federal rules control how quickly the money must come out and how it is taxed. Without a plan, a lifetime of savings can be cut down by poorly timed taxes or end up with the wrong person.
At The People’s Firm PLLC, our attorneys provide IRA inheritance planning in Washington, DC for individuals, retirees, executives, and business owners. We review every retirement account you own, align it with your will and trusts, and build a strategy around the inherited IRA rules your beneficiaries will actually face.
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Our IRA Inheritance Planning Services
Our retirement account estate planning services include:
- Review and update of IRA, 401(k), and TSP beneficiary designations
- Primary and contingent beneficiary planning
- Planning for IRA beneficiaries under the SECURE Act 10-year rule
- Trusts drafted to receive IRAs (conduit and accumulation trusts)
- Planning for minors, beneficiaries with special needs, and blended families
- Roth conversion strategy coordinated with your tax advisor
- Charitable planning with retirement assets
- DC and federal estate tax planning for retirement accounts
- Guidance for beneficiaries who have already inherited an IRA
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Why IRA Inheritance Planning Matters
Most estate plans focus on the will and the revocable trust, but an IRA generally passes to whoever is named on the custodian’s beneficiary form, even if your will says something different. We regularly see forms that still name a former spouse, list a beneficiary who has passed away, or name no contingent beneficiary at all. When that happens, the account may default to your estate, which can mean probate, faster payouts, and higher taxes than you intended.
The rules for beneficiaries also changed significantly. For deaths after 2019, the SECURE Act replaced the lifetime “stretch IRA” for most non-spouse beneficiaries with a 10-year rule, requiring the inherited account to be emptied by the end of the tenth year after the owner’s death. Depending on when the owner died, annual required minimum distributions (RMDs) may also be required within that period. For an adult child in their peak earning years, a large traditional IRA paid out over ten years can mean a substantially higher tax bill.
Retirement account inheritance planning addresses these issues while you are still in a position to make changes, so your beneficiaries inherit a plan rather than a problem.
Understanding the Inherited IRA Rules
The inherited IRA rules treat beneficiaries differently depending on their relationship to the owner and their circumstances. Eligible designated beneficiaries, which generally include a surviving spouse, a minor child of the owner, a disabled or chronically ill beneficiary, and a beneficiary not more than ten years younger than the owner, may still be able to take distributions over a longer period. Most other individuals, including adult children and grandchildren, are generally subject to the 10-year rule.
A surviving spouse usually has the most flexibility, including the option to roll the account into their own IRA or keep it as an inherited IRA. The type of account matters as well. Distributions from an inherited traditional IRA are generally taxed as ordinary income, while qualified distributions from an inherited Roth IRA are generally income-tax-free. We help you choose beneficiaries and structures with these differences in mind.
Naming a Trust as Your IRA Beneficiary
Leaving an IRA directly to a person is not always the best choice. If a beneficiary is a minor, has special needs, struggles with money, is going through a divorce, or faces creditor concerns, a trust may provide the control and protection an outright inheritance cannot. Inherited IRAs also generally do not carry the same creditor protection the original owner’s IRA may have had, which is why IRA planning is often coordinated with broader Wealth Protection & Risk Planning.
A trust that receives an IRA must be drafted with the retirement distribution rules in mind. A conduit trust passes distributions through to the beneficiary, while an accumulation trust allows the trustee to hold them inside the trust for greater protection, often at higher trust tax rates. We help you choose and draft the structure that fits what you are trying to protect.
Estate Tax Planning for Retirement Accounts in Washington, DC
An IRA is generally included in your taxable estate, so for larger estates the same account can face estate tax at death and income tax when your beneficiaries withdraw it. Washington, DC also imposes its own estate tax, with an exemption that has been significantly lower than the federal exemption. Families who do not expect to owe federal estate tax may still need to plan for DC estate tax.
We coordinate your retirement accounts with your broader Wealth Transfer & Tax Strategy and Tax-Efficient Wealth Transfer planning. For clients with charitable goals, a traditional IRA is often the most tax-efficient asset to leave to charity, since a qualifying charity generally pays no income tax on the distribution. Where the estate also includes appreciating assets, Estate Freeze Strategies may be part of the plan.
Who We Help
Washington, DC households often hold several types of retirement accounts, each with its own beneficiary form and plan rules. Federal employees may have a Thrift Savings Plan account alongside IRAs and rollover accounts, and updating one beneficiary form does not update the others. Executives often hold retirement savings alongside company stock and awards that should be reviewed through Equity Compensation Planning.
Business owners may hold SEP or SIMPLE IRAs or company-sponsored plans tied to the future of the business, which we coordinate with Estate Planning for Business Owners and Business Succession Planning. For diplomats, Foreign Service families, and beneficiaries living abroad, we also address cross-border questions through Diplomatic Wealth Planning and International Asset Protection.
We also work with beneficiaries. If you have recently inherited an IRA and are looking for an inherited IRA lawyer in DC, we can help you understand your distribution options and deadlines before you make decisions that are difficult to undo.
Our IRA Inheritance Planning Process
- Account review: We identify every IRA, 401(k), TSP, and other retirement account you hold and review the beneficiary designations on file.
- Family and goals assessment: We look at your beneficiaries, their ages and circumstances, your existing will and trusts, your estate size, and your charitable goals.
- Strategy: We recommend beneficiary designations, trust structures, and tax-conscious strategies, coordinating with your CPA or financial advisor where needed.
- Implementation: We prepare the trust and estate documents and guide you through updating each beneficiary form.
- Ongoing review: We recommend revisiting the plan after marriage, divorce, a birth or death in the family, a rollover, retirement, or a significant change in account value.
Why Choose The People’s Firm PLLC
Retirement accounts sit where estate law, tax rules, and family planning meet, and getting one piece wrong can undo the rest. Our attorneys look at your IRA as part of your entire estate plan, not as a standalone form. We explain your options in plain language, coordinate with your tax and financial professionals, and build a plan that reflects how your family actually works.
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Frequently Asked Questions
What is the 10-year rule for inherited IRAs?
For many beneficiaries of IRA owners who died after 2019, the inherited IRA must be fully distributed by the end of the tenth year after the year of death. The rule was created by the SECURE Act and replaced the lifetime “stretch” for most non-spouse beneficiaries.
What are the inherited IRA rules for non-spouse beneficiaries?
Most non-spouse beneficiaries, such as adult children and grandchildren, must empty the inherited IRA within ten years. If the owner had already reached their required beginning date, the beneficiary may also need to take annual distributions during that period.
What are the inherited IRA rules for a spouse?
A surviving spouse generally has the most flexibility. A spouse can often roll the account into their own IRA, treat it as their own, or keep it as an inherited IRA, depending on their age, income needs, and long-term plans.
Can I still stretch an inherited IRA?
For most adult children and other non-spouse beneficiaries, the lifetime stretch is generally no longer available. Eligible designated beneficiaries, such as a surviving spouse or a disabled or chronically ill beneficiary, may still qualify for a longer payout period.
Do you pay taxes on an inherited IRA?
Distributions from an inherited traditional IRA are generally taxed as ordinary income to the beneficiary, and the account does not receive a step-up in basis. The IRA may also be included in the owner’s estate for federal and Washington, DC estate-tax purposes.
What are the inherited Roth IRA rules?
Qualified distributions from an inherited Roth IRA are generally income-tax-free. Most non-spouse beneficiaries must still empty the account within ten years but are generally not required to take annual distributions during that period.
Should I name a trust as my IRA beneficiary?
A trust can provide control and protection for minors, beneficiaries with special needs, or blended families. However, it must be drafted with retirement account rules in mind, or it may accelerate distributions and taxes.
Does a will override an IRA beneficiary designation?
Generally, no. An IRA usually passes according to the beneficiary designation on file with the custodian, even if your will says otherwise. Your will typically controls the IRA only if your estate is the named beneficiary or no valid beneficiary is named.
Who is an eligible designated beneficiary?
Eligible designated beneficiaries generally include a surviving spouse, a minor child of the account owner, a disabled or chronically ill individual, and a beneficiary not more than ten years younger than the owner.
What are the inherited IRA RMD requirements?
Required minimum distribution (RMD) requirements depend on the type of beneficiary and whether the owner died before or after their required beginning date. Some beneficiaries must take annual RMDs within the 10-year period, while others only need to empty the account by the end of the tenth year.
Protect What You’ve Saved for the People Who Matter Most
A beneficiary form signed years ago may no longer reflect your family, your estate, or the rules your heirs will face. Our attorneys provide IRA inheritance planning in Washington, DC that brings your retirement accounts, trusts, and estate plan into one coordinated strategy, so your beneficiaries keep more of what you leave them.