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Eli Mitcham speaks out on common
financial planning concerns. Information provided here is meant to be general in
nature and should not be construed as a solicitation to
effect transactions in securities, or the rendering of
personalized investment advice for compensation, over
the Internet.
Disclosure to Consumers
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- How to Leverage your IRA
- Don't Make this Mistake with Your IRA
- Particulars of the Stretch IRA
- Missed Your RMD? Better Get out your checkbook
- What to Do if your IRA is the bulk of your estate?
- Which Investments are best for your IRA?
Filled with Timely Tips to help you get the most out of your finances!
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What to Do if your IRA is the bulk of your estate? Conscientious savings habits as well as 401(k) and other employer-sponsored plan rollovers have made IRAs the bulk of many retirees' estates. Furthermore, the tax-deferred status of IRAs frequently allows these assets to grow more rapidly than other funds you might own. This can cause a big problem for non-spouse beneficiaries who may have to use a large portion of the accounts to pay taxes. Everything that you own is included in your taxable estate. Hence if you die in 2007 and your estate exceeds $2,000,000; federal estate tax up to 46% must be paid on the excess. Then to make bad matters worse, your heirs will have to pay income tax, based on their tax bracket (up to 35%), on the inherited accounts. There are several strategies that you may want to consider to reduce the size of your taxable estate yet maintain the amount you leave to your heirs. You could roll your IRA to a Roth IRA. The income tax that you would pay on the funds transferred will reduce your taxable estate. In addition, your beneficiaries will receive the accounts income tax free. Do you have a favorite charity? Charitable gifts from your IRA could give you an immediate tax deduction. But you will also get an immediate tax bill. A better alternative may be to name the charity as the beneficiary of your IRA or plan for the funds to go into a charitable trust after your death. Your estate will be able to deduct the value of the gift for estate tax purposes, you will avoid the income tax, and your beneficiaries could receive a life-time income. How about paying someone else to come up the necessary money for income and estate taxes? Life insurance proceeds can be structured so that they are income and estate tax free, and they can be used to keep the bulk of your IRA for your heirs. We can help you come up with a tax-efficient strategy to make sure your beneficiaries receive as much as possible. If you would like to meet either in person or by telephone, or simply would like to receive my free "IRA Guide", please use the CONTACT US link and let me know. I look forward to meeting you!
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