Can my 80-year-old dad give me money from his IRA?

  @Money November 18, 2013: 5:27 PM ET
ira withdrawals

You can't transfer money directly from an IRA to a child.

NEW YORK (Money Magazine)

My 80-year-old father has a substantial amount in his IRA. Can he give it to his children right now? -- Roxanne, Brownsville, Texas

Your dad can't transfer the account directly, says Ed Slott, publisher of Ed Slott's IRA Advisor newsletter; he could, however, take out all he wants, pay any taxes due, and then hand out the money.

His withdrawals from a traditional IRA, other than nondeductible contributions, would be taxed as ordinary income; Roth IRA withdrawals are tax-free if the account has been open for five years.

Unless the kids need cash urgently, it's better to name them as beneficiaries.

Related: Will saving $1.8M for retirement be enough?

Upon your dad's death, a child can keep the assets growing tax-deferred in an IRA, taking mandatory minimum distributions based on life expectancy. Money from a traditional IRA is taxable; inherited Roth money generally isn't.

Related: Tips for retirement planning To top of page

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