There's also more flexibility for multiple beneficiaries. If more than one beneficiary inherits an IRA, distributions are based on the life of the oldest beneficiary. So the strategy is to separate the IRA into different IRAs and then each beneficiary can use his or her own life expectancy. Under the old rules, separation had to be done before the owner died. Now it can be done as late as December 31 of the year following the owner's death.
Problems also can occur when one beneficiary is a charity and the other is a named individual.
In this situation, the named individual cannot use his or her own life expectancy. Under the new rules, however, distributing the charity's share from the IRA before the end of the year following the year of death allows the named individual to stretch out the remaining assets over his or her lifetime. Again, if there are multiple named individuals, they might break it into separate IRAs as suggested earlier. This article was produced by the Consumer Affairs Dept. of The Financial Planning Association and provided to you courtesy of Nigel B. Taylor, CFP, Santa Monica, California.