What are the options for her money, will I be able to access it for her? Say she gets sick or something will we I be able as the parent to access it? What are the laws in that? Will I have to lock it away till she is 18?

What are the options for her money, will I be able to access it for her? Say she gets sick or something will we I be able as the parent to access it? What are the laws in that? Will I have to lock it away till she is 18?

Depends on the terms of the will and the law of your particular state.

When you inherit an IRA from someone other than your spouse you must start taking distributions by the end of the following year. You can stretch those distribution out over the life of the beneficiary if you want, but you don't have to. In other words - you can take it all out immediately if you want. Your daughter will have to pay income taxes on the amount withdrawn each year.

First thing to do is to set up an inherited IRA account for your daughter, then do a direct transfer from your father's IRA to this new account. This MUST be a direct roll-over, and the new account MUST be classidfied as an inherited IRA account (not a traditional account). My advice is to talk with the bank or investment house of the existing IRA and find out exactly how to do this.

Since your daughter is a minor you will be the custodian for this new account. Your responsibilities are to make sure that the money is used solely for your daughter's benefit. You can use it to pay her medical bills, or college tuition, but don't use it for vacation. Also, don't forget to keep enough of each distribution to pay Uncle Sam his due each April

I would suggest thinking about the following course of action: set up the inherited IRA account as described above, and each year take out as much as you can without putting yourself into a higher tax bracket (remember that the kiddie tax provisions makes it so that your tax rate is determined by adding your adjusted gross income to your daughter's). Then transfer the amount remaining form the distribution after taxes to a savings account or investment account in your daughter's name. Let that account grow, or use it as needed for your daughter's benefit. Depending on the amount that your father left for her you can probably get this done over the next few years. This way you get out of the administrative complexity of the inherited IRA as soon as practical.

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Medical, school anything else?

You have posted once before regarding this. Would not the IRA be held in trust until her l8th birthday. That way, it will be there for continuing education or anything else she needs.

I hope you would put it away for her so it won't be accessible by anyone but her.

You seem anxious about it? Talk to her lawyer.


Tick

Hello w:

I don't think you can use it for ANYTHING.

excon

I've merged your two threads. Please don't start multiple threads over the same question. Use the Answer options to add follow-up.

I also have to wonder why you asked a second time. Seems to me ebaines' answer was comprehensive. Since you are required to withdraw something each year, that amount can be used for any expenses relating to the child's rearing.