How to Delay Tax on an IRA Distribution
- 1). Determine the number of years you have until you are required to take IRA distributions vs. your spouse. If your spouse is younger and is your beneficiary, then in the event of your death, the RMD will be adjusted to your spouse's age and deferred. This is a good option for those who have many years before they are required to take distributions.
- 2). Hire an estate attorney and review you assets if you are close to your RMD starting. Open a QTIP trust. A qualified terminal interest property (QTIP) allows a surviving spouse to get income from an asset that terminates at their death. A spouse can make unlimited gifts to each other, qualifying for the marital deduction.
- 3). Assign the IRA as an asset into the QTIP trust. RMDs are then determined by the surviving spouse's age. This is the same as what happens in Step 1 if the IRA owner dies and leave the IRA to the spouse, the only difference is that the IRA owner is not yet deceased.
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