Sorry, Calirose. All Roths IRAs are funded with money that has already been taxed. Is it possible that the 401K was rolled into a traditional IRA and not a Roth IRA? I'll third the need to talk to a tax professional. I'd suggest an Enrolled Agent who will probably charge you less than a tax attorney.

I do not think you can reduce the amounts of your required minimum distributions by listing your grandchild as a beneficiary. In order to avoid "market timing" in taking your distributions, try to make them "neutral" with respect to the market performance. You can do that my planning in advance to take equal distributions of 1/4 of the total amount to be distritubed each quarter of 2009 -- say, March, June, Sept, and Dec. If you are fortunate enough that you do not need the money from your distribution for living expenses, you can just transfer the money to a taxable account and put it in a similar investment that it was in in the tax deferred account -- or you could take the opportunity to consider a different investment. One more thing: If you made any IRA contributions and paid taxes on them because your income was above the limit for taking a tax deduction, your required minimum distribution should deduct those taxed contribitutions, or you would be paying taxes on that money twice. I'm sure there an IRS information sheet that explains that whole situation. It makes excellent reading if you have insomnia. Look up tax form 8606. That's the one you should be using when you file your return to report your cumulated taxed IRA contributions. Have fun.

Trusts are EVIL. I've had to deal with two of them in the last three years, and one of them will still have to be dealt with. I think IRA thingees kinda die at death if the bennies are under-age. But maybe again, maybe not,,,,,, not real up on IRA's since all of my Trustors were before that time period.

As far as the IRA,s, she had these long before we were married so I dont think I can touch those. As far as the trust for the kids, I think it is a good idea but it does not help me raise these kids. I could really use this money. I feel like this is just so wrong of her. Its almost like she does not trust me or have any respect for me. I know originaly, when my wife first got this policy, She has providing financial support to her mother to help raise a relatives daughter. That was many years ago and I guess she still feels she should have the money. I got a feeling that this money will tear the family apart.