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Traditionally, IRAs have been one of the most popular retirement investments because they generate income, minimize taxes and – best of all – offer an opportunity for maximum tax-deferred payouts to beneficiaries – such as children and grandchildren. The latter, also known as Inherited IRAs, have always been a treasured gift, for both the income it provides and its tax-deferred component. Unfortunately, the IRS has passed a new regulation that impacts IRA legacy planning. For more detailed information about IRA legacy planning please call our office at 724-382-1298 or complete the meeting form to the right to start a dialogue.
When it comes to IRA legacy planning, we will take any advantage we can with the current tax code to benefit our clients. This view fits with our overall 5-point investment strategy, which includes:
Remember: Taxes and IRA legacy planning go hand-in-hand. It doesn’t do you much good to make 20, 30 or 40 percent annually on your portfolio if the largest beneficiary is the IRS.
When you work with us, we’ll help you put together an IRA legacy plan that will allow you to pass on your wealth to your family – if you choose – without serious tax implications.
Our legacy planning strategy focuses on what is known as an Inherited IRA. This special IRA – which has considerable tax benefits – has to be implemented at the time of death of the benefactor. However, if the beneficiaries are unaware of the advantages of an Inherited IRA and take their inheritance in cash, they likely will be subject to significant taxes on those funds.
Here’s how we advise our clients to thoughtfully prepare for and handle this situation:
We teach our clients early on how to establish an Inherited IRA as part of their overall retirement investment strategy.
The Inherited IRA becomes part of a check list that we revisit every time we meet.
Over time the Inherited IRA moves into sharper focus as our clients begin to consider their legacy plan to benefit their families.
We are always available to answer any questions the Inherited IRA beneficiaries may have.
If you decide to pass on your investment income to your family, you’ll want to do so in a way that will keep the IRS from claiming a significant percentage of the money.
It’s never too early to think about a legacy plan. We like to make it a part of the overall retirement investment strategy so it’s always on the checklist as something to discuss, especially as the years go by.
An Inherited IRA allows your beneficiaries to place inherited funds in a tax-deferred account, where they can invest the money and receive annual disbursements.
Inherited IRAs are best planned in advance but are established upon the death of the benefactor.
We’ll be available to brief them on all the key aspects of an Inherited IRA and answer any question they have.