Voyant now supports a new investment type called the Inheritance Target IRA, giving users more flexibility and precision when modeling inherited retirement accounts. This enhancement enables financial professionals to model inheritance events in alignment with IRS rules while customizing fund flows and withdrawal strategies.
When to Use the Inheritance Target IRA
The Inheritance Target IRA is most commonly used when the deceased account holder, identified in the “Inherited From” field, is already included in the plan. When this is the case, Voyant will automatically determine the year of death, removing the need for manual input. The actual transfer of funds will still be scheduled to occur in that same year.
Key Benefits
1. Control Over Inherited Funds
This account type allows users to direct inherited assets to a specific account of their choosing. This is especially useful for modeling custom strategies, including staged withdrawals or further transfers, all while remaining compliant with IRS rules.
2. Spousal Election Options
For spousal beneficiaries, planners can now choose whether to apply the Spousal Election. This selection has a direct impact on how Required Minimum Distributions (RMDs) are calculated and can play a critical role in broader tax strategy.
What Happens If You Don’t Specify an Inheritance Target IRA?
If a user does not manually create an Inheritance Target IRA, Voyant will automatically generate one and apply Spousal Election by default. This default action ensures that inheritance is still handled accurately, even if you haven’t made manual changes.
How It Differs from the General Inherited IRA Account Type
The traditional Inherited IRA account type remains available and is best used when the deceased is not included in the plan.
For instance, on the Beneficiaries tab of a Traditional IRA:
If the inheritance option is set to Spousal Rollover, funds are directed to the spouse’s Traditional IRA.
If set to Inherited IRA, funds will instead be directed to a designated Inherited IRA.
Why This Matters: Understanding RMD Timing
The difference between these options becomes especially important when calculating RMDs:
Spousal Rollover to Traditional IRA
RMDs will be based on the surviving spouse’s age.
Inheritance Target IRA (Inherited IRA)
RMDs will be based on the original account holder’s age.
This distinction can create meaningful differences in timing, tax exposure, and income planning.
In Summary
Voyant’s new Inheritance Target IRA account type adds:
More accurate modeling of inherited retirement accounts
Greater control over the destination of inherited funds
Clear, customizable handling of spousal elections
Compliance with IRS guidelines
Planners can now confidently model complex inheritance scenarios while exploring strategies to optimize RMD timing and minimize tax exposure.
And remember: if the deceased is younger than the surviving spouse, using the Inherited IRA option could allow you to delay RMDs, since the distribution schedule would be based on the deceased’s age, not the beneficiary’s.
Example of how to model this in Voyant:
In the beneficiary section of the account that will be inherited, select "inherited IRA" as the Spousal Inheritance Option.
Create an "Inheritance Target IRA" account owned by the person you want to inherit the account. Toggle on Spousal Election. Click "Done" to save.
The Results: When the original owner dies, the account will pass to the beneficiary in the Target IRA, and the RMDs on this account will begin at the beneficiary's age 75.