If you leave an IRA to a spouse, it’s easy to keep it going and growing. Surviving spouses can roll over the funds to their own IRAs, postponing distributions—and taxes—until age 70 1/2.

But if you leave the IRA to children, you’d better leave tax-saving instructions, too. Best option is to name them as beneficiaries of the IRA (or secondary beneficiaries if a spouse is still alive). Each one must then roll his or her portion of the IRA into a separate inherited-IRA account. Then they can take annual distributions based on their own life expectancies.

If the IRA goes to the estate, there are different rules. If you die before age 70 1/2, they will have to empty the account—and pay taxes on it—within five years. If you die after age 70 1/2, withdrawals are based on your life expectancy built into IRA tables, maybe 15 years at best. Note, too, that inherited IRAs are not exempt from bankruptcy, the Supreme Court determined.

For nearly 30 years, Mike Nickerson has owned and managed a small, full-service accounting practice in the Midcoast. He holds a bachelor's degree in accounting from University of Southern Main and a master's degree in financial planning from Bentley University.

He is a past board member and president of the Maine Society of Certified Public Accountants and currently serves on the Maine Board of Accountancy.

An aged rock musician, Nickerson now finds musical enjoyment playing upright and electric bass in a variety of bands spanning folk to jazz music genres. He and his wife have three grown children, and they enjoy their free time hiking, kayaking, golfing, bicycling and motorcycling.

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