You don’t have to choose just one of these options. You can divide a large IRA into several smaller ones and name a different beneficiary for each one. (If your money is in an employer’s plan, you can roll it into an IRA and then split it.)
If you name several beneficiaries for one IRA, the oldest one’s life expectancy will determine the payout after you die. But with separate IRAs (one for each beneficiary), each life expectancy will be used, providing the maximum stretch out.
This is especially important if a charity is involved. It has a life expectancy of zero, so the IRS would consider it the oldest beneficiary. Depending on when you die, this could cause the entire IRA to be paid out in just five years.
If you divide your IRA now, you will need to calculate a distribution for each one, but it can be worth the trouble. Under the new rules, your IRA can be divided even after you die. Splitting a large IRA can also save estate taxes.