You’ve worked hard to grow your retirement savings. If your IRA is a big part of your estate, you probably want to make sure it benefits your loved ones. But inheriting an IRA is different from inheriting other assets. If it’s not handled carefully, your family could face higher taxes or missed opportunities.
At Neyens Law PLLC, we help Oakdale families understand how to protect retirement accounts through smart legal planning. Whether you have a traditional or Roth IRA, planning now can make a big difference later.
You might find what Minnesota families should know about inheriting an IRA helpful if you’re starting to explore your options.
Why IRA Planning Is Different
IRAs are subject to special tax rules, especially when passed on after death. In most cases, inherited IRAs must be withdrawn under required timelines, which means the tax burden can hit faster than expected.
The SECURE Act changed the rules for many beneficiaries. Most non-spouse heirs now have to fully withdraw the IRA within 10 years of the original owner’s death. That could mean a large tax bill if it’s not planned for ahead of time.
Key IRA Terms You Should Know
- Traditional IRA: Contributions are typically tax-deductible. Withdrawals are taxed as income.
- Roth IRA: Contributions are made with after-tax dollars. Qualified withdrawals are tax-free.
- Required Minimum Distributions (RMDs): The amount you must withdraw from an IRA each year after a certain age.
- Stretch IRA (no longer available for most): A method used before the SECURE Act to extend withdrawals over a beneficiary’s life.
Understanding how each works can help you and your loved ones avoid mistakes and protect more of your retirement savings.
How Estate Planning Connects to IRA Planning
Estate Planning isn’t just about creating a will. It’s also about protecting specific types of assets like retirement accounts. A will does not control where your IRA goes unless the IRA has no designated beneficiary.
You must name a beneficiary directly on the account. This can be a person, multiple people, or even a trust, but each choice comes with different tax and legal results.
Proper planning can:
- Reduce the tax burden on your heirs
- Avoid probate for your IRA
- Prevent disputes between family members
- Support minor or dependent beneficiaries
- Protect the IRA from creditors or lawsuits
Unsure if your IRA is set up correctly?
Call (651) 478-8999 or contact Neyens Law PLLC to review your beneficiary designations and estate plan.
Common Mistakes in IRA Inheritance Planning
It’s easy to make simple errors with big consequences. Some of the most common include:
- Failing to name a beneficiary
- Naming your estate as the beneficiary
- Choosing the wrong kind of trust
- Not updating beneficiary forms after divorce or death
- Forgetting about tax impacts on non-spouse beneficiaries
Once the original account holder dies, mistakes are often hard, or impossible, to fix. We help you avoid these issues by planning early and reviewing everything carefully.
Using a Trust as an IRA Beneficiary
There are cases where naming a trust as the IRA beneficiary makes sense—especially if you have minor children, a loved one with special needs, or concerns about how the funds will be used.
But not all trusts qualify to receive inherited IRAs in a way that preserves tax advantages. The trust must meet certain legal standards. These are called “see-through trusts.”
We help Oakdale clients set up the correct kind of trust and align their IRA planning with the rest of their estate documents.
Looking for clarity on this?
Using Trusts in IRA Planning, when and why it matters provides additional guidance on this topic.
Spouse vs. Non-Spouse Beneficiaries
If your spouse inherits your IRA, they often have more options. They can roll it into their own IRA or delay withdrawals until retirement. Non-spouse heirs, however, typically must withdraw the entire account within 10 years unless they qualify for one of the limited exceptions.
Knowing the rules can help you plan who inherits what, and how they receive it.
Roth IRAs: A Special Opportunity
Roth IRAs are powerful tools in estate planning. Although your heirs still have to withdraw funds within 10 years, those withdrawals are tax-free if the account has been open for five years.
If you convert a traditional IRA to a Roth before death, you pay the taxes now, giving your heirs tax-free income later. This strategy isn’t right for everyone but can be helpful for some families.
How Neyens Law PLLC Helps Oakdale Families
At Neyens Law PLLC, we help individuals and families in Oakdale create smart, effective IRA inheritance plans. We coordinate your retirement planning with your will, trust, and other documents so that everything works together.
We also collaborate with financial advisors and CPAs when needed to create a plan that supports your long-term goals and protects your loved ones from surprises.
Whether your IRA is large or small, you deserve a plan that helps your family benefit in the way you intended.
Ready to create or update your plan?
How IRA Beneficiaries Should Prepare Under the SECURE Act explores what your heirs need to know under current tax laws.
Let’s Make Your IRA Work for Your Legacy
Your IRA can provide long-lasting benefits for the people you care about—if it’s handled with care. We’re here to help you protect it.
To get started, call (651) 478-8999, send us a message, or visit Neyens Law PLLC to schedule a meeting.
Proudly Serving Oakdale and Nearby Communities
Neyens Law PLLC works with families across Oakdale and the surrounding area, including Woodbury, Maplewood, and Stillwater. We’re proud to support Minnesota families planning for the future—one step at a time.