You might want to name your children or grandchildren as beneficiaries of your IRA. This approach will significantly increase the long-term tax deferral because of the beneficiaries’ longer life expectancies. Required distributions can be stretched over more years.
This will exclude your spouse, though. As an offset, you can increase your life insurance, naming your spouse as beneficiary of the policy.
With this strategy, your spouse–who otherwise might inherit your IRA when he or she is elderly and not capable of making savvy financial decisions–will get the insurance proceeds but not the IRA. Your survivor won’t have to handle the mechanics of rolling over your IRA to his or her own name, designating new beneficiaries, and coping with the minimum distribution rules.
