It’s Time to Move Assets Out of Your Company Plan.
What are Your IRA Distribution Options?
There has been a lot of talk, and some new regulations, regarding advice given to plan participants when they have the opportunity to move funds out of their employer plan. Here’s an example to illustrate the IRA distribution options available.
Ron has retired from his job. He has participated in his 401(k) plan at work for a number of years and has a substantial balance in the plan. What are Ron’s options for that money?
There are six options that are allowed by the tax code. An employer plan can limit these options. A plan participant will only be able to use the options available to him in his plan. All of them have pros and cons and careful evaluation of a plan participants finances and goals is necessary in order to determine the best option for that individual.
3 BIG Differences Between Life Insurance & Roth IRAs
Life insurance and Roth IRAs have a basic structure in common. They are both wealth transfer tools that help facilitate an efficient transfer of assets from one generation to the next, and they both can provide a tax-free legacy. Despite their many similarities, Roth IRAs and life insurance are very different, and the rules that apply to one don’t always apply to the other. In fact, more often than not, that’s the case. Below, we discuss the differences between the two retirement planning vehicles.
Retirement planning is complicated. It’s a personal and situational endeavor with plenty of possible pitfalls in the way of success. Inherited IRA rules vary depending on the beneficiary type: Non-Spouse Beneficiaries, Spouse, and a Trust Beneﬁciary.
As a beneﬁciary of an IRA, you may ﬁnd yourself with many questions and concerns. The rules are different for a non-spouse beneﬁciary than they are for a spouse or trust beneﬁciary. Arm yourself with working knowledge of some of the Do’s and Don’ts, and work with a competent, educated ﬁnancial advisor to keep more of your assets and lose less to taxes and unnecessary fees.
Only move the inherited funds as a direct transfer. Inherited IRA funds must be moved via a trustee-to-trustee transfer; NOT a 60-day rollover. In a direct transfer, the beneﬁciary does not have use or control of the IRA funds during the transfer.
When should you look for a missed RMD (required minimum distribution)?
RMDs must be taken by IRA owners beginning in the year they turn age 70 ½ and by IRA and non-spouse Roth beneficiaries beginning in the year after the death of the account owner. RMDs not taken are subject to a penalty of 50% of the amount not taken each year.
When should you looked for a missed RMD?
You should look for a missed RMD every year after an account owner turns age 70 ½ and when an IRA or non-spouse Roth beneficiary inherits an IRA. Ask your advisor to double check any calculations to be sure they are correct.