Final answer:
Naming the estate as the beneficiary of a traditional IRA can have disadvantages such as limited tax benefits, increased taxes for beneficiaries, and loss of flexibility in distribution.
The answer is option ⇒a, c and d
Step-by-step explanation:
Naming her estate as the beneficiary of her traditional IRA can have several disadvantages:
- Limited tax benefits: By naming her estate as the beneficiary, Maryellen may lose out on potential tax benefits that would have been available to individual beneficiaries, such as the ability to stretch the distributions over their own lifetime.
- Increased taxes for beneficiaries: If the estate is the beneficiary, the distributions from the traditional IRA may be subject to higher tax rates as compared to individual beneficiaries who may have lower tax brackets.
- Flexibility in distribution: By naming her estate as the beneficiary, Maryellen may lose the flexibility to determine how the IRA assets are distributed after her passing. The distributions will be subject to the distribution rules of the estate.
The answer is option ⇒a, c and d