Question about naming a minor relative as a beneficiary?

I'm 53 and wanting to list my "new born" great niece as the primary beneficiary of an IRA account I just opened. My question is... If I should happen to "kick the bucket", "take the eternal dirt nap", (how ever you want to put it) before she turns 18, does my 401k account automatically divert to her parents, who would be it's contingent beneficiaries, or is there some kind of custodial provision I need to know about? How does that work? I'm pretty much a dunce about this sort of thing.

Question about naming a minor relative as a beneficiary?
Listen, you can't get comprehensive advice on this forum. For one thing, most people who inherit an IRA just roll it over to another ira, so that they can take advantage of the growth tax deferred. So, if you pass away, and your newborn great niece waits until she is 59.5 before she starts withdrawing $ from your IRA, she will benefit greatly from 60 years worth of growth and interest. What you should do is call the administrator and find out how to set up the beneficiary designation the way you want it. If you don't trust her parents to act in her best interest, then you can find out if the administrator will take on this fiduciary responsibility, or appoint someone else that you do trust. Your first step is to talk to the administrator of your IRA. Good luck.
Reply:No. Suggest you explain to parents that with an inherited IRA there are two choices. The beneficiary receives a monthly check, the amount is determined by age, and only what is drawn is taxed.


Or they close the entire account and pay income tax on all of it. Poor choice.


So the monthly check would be sent to minor child and parents then deposit it into a custodial account and spend the money for child's expenses. If you are worried about the parents abusing the money then you can set up a trust or appoint a financial guardian.


See a estate lawyer.
Reply:No, it would be controlled by her legal guardian, unless you set up a fiscal guardian for her.





You probably need to sit down and talk with an estate planner in your state, to set it up the way you want it to work.
Reply:A trustee for the minor's account would have to be designated before the 401(k) custodian could transfer the assets. Normally, that would be a parent. I'd suggest asking your 401(k) custodian about it.

women self defense