November 14, 2012   Retirement Planning

What to Do with an Inherited IRA

IRAs are among the largest assets inherited by heirs and beneficiaries. These accounts have been able to grow to such large amounts because income taxes are deferred until the owner begins to take distributions, usually after reaching age 70 ½.   Those who inherit an IRA must be very careful to follow the rules, which are complicated and often confusing. It is possible to keep an account growing tax-deferred for decades, but an innocent error can cause the recipient to lose the tax-deferred advantage and force her to pay tax now on the entire account balance. As a result, it is critical to talk with an expert before making any decision or taking any action, and to understand all available options. Here are some to consider.   Cash Out Option Anyone who inherits an IRA can...
November 28, 2011   Estate Planning

The Simplified IRA Distribution Rules

When you reach a certain age, usually April 1 after you become age 70 ½, Uncle Sam says you must start taking money out of your IRA. This is called your required beginning date. The amount you must withdraw each year is called your required minimum distribution. Calculating this amount is much easier now that it used to be.Each year you take the year-end value of your IRA account and divide it by a life expectancy divisor from the Uniform Lifetime Table. (The entire table is shown below.) The result is the minimum you must take out for that year. You can take out more if you wish, but this is the minimum you are required to withdraw.For example, the divisor at age 70 is 27.4. Let's say your year-end account balance is $100,000. You divide $100,000 by 27.4, and that's your re...
October 15, 2010   Retirement Planning

Six Biggest IRA Beneficiary Form Mistakes

By Robert A. Ross, J.D.
Americans hold nearly $15 Trillion in IRA’s and other qualified plans. If you have a retirement plan you have made a series of very wise deci­sions. Now you must take steps to protect and preserve what you have worked so hard for.   Do you want your heirs to have to chase after the IRA money? Better make sure you have an up to date beneficia­ry form. On January 26, 2009, the United States Supreme Court unanimously ruled in the case of Kennedy vs DuPont that the plan administrator was not required to honor the divorce decree. William and Liz Kennedy were married in 1971 while William was an employee of DuPont and a participant in its Savings and Investment Plan. William designated Liz as the sole beneficiary of his plan benefits. When William and Liz divorced in 1994, the...
July 17, 2008   Estate Planning

How to Protect Qualified Accounts from Creditors, Predators, Youth, and Inexperience

By Larry Hartley, Esq., CELA
The Problem – and the Opportunity   On a regular basis, estate planning attorneys encounter clients who have successfully ac­cumulated large amounts in qualified retirement plans. These qualified monies may be sitting in individual retirement accounts (IRA’s), or they may be held in company pension plans such as 401(k)’s. In most cases, the intent was to provide the owner with a secure retire­ment. Partly as a result of the tax-deferred growth within such accounts, many have grown over the years to become a significant asset in the client’s portfolio. When a client has successfully amassed other wealth, he or she may be in the enviable position of no longer needing the money in qualified accounts for support, and is often loathe to take even the requir...
April 15, 2007   Estate Planning

New Law Creates Exciting Planning Opportunities

The purpose of this newsletter is to inform you of changes in the law and to provide planning information and general financial news. These newsletters also give me a chance to share new techniques to enhance your planning, as well as to help you to stay current with tactics designed to maximize the effectiveness of your plan. I hope you will read each newsletter carefully to keep up to date on these important topics. Please feel free to contact me if you have any questions about this or any matters relating to your planning.The new Pension Protection Act of 2006 (signed into law last Fall) creates significant planning opportunities for those who understand it. This newsletter focuses on two key provisions: (1) non-spousal rollovers from a qualified plan to an inherited IRA and (2) charita...
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