Retirement Accounts Play a Unique Role in Your Estate Plan

As baby boomers continue to retire and current retirees are living longer, it is clear that retirement accounts must be considered in any estate plan.

2012-11-28

November 28, 2012 (Press-News.org) Retirement Accounts Play a Unique Role in Your Estate Plan

Retirement is looming large -- or is already here -- for much of the U.S. population. As baby boomers continue to retire and current retirees are living longer, it is clear that retirement accounts must be considered in any estate plan. In fact, as 401(k)s and IRAs become more and more a significant part of retirees' estates, retirement accounts are proving to be the largest asset for many people.

Any good estate plan must account for the tax consequences of retirement accounts. Understanding your retirement account and its impact on your beneficiaries is essential to providing for heirs and loved ones upon your death.

Tax Effects

In general, the beneficiaries of inherited property do not have to pay income tax on the inheritance. After all, the IRS taxed your income when you received it. However, because of the tax-deferred status of retirement accounts, the beneficiary of a retirement account will have to pay income taxes on funds received according to his or her personal income tax rate.

Federal law mandates that retirees begin taking withdrawals from a retirement account after a certain age; beneficiaries must also begin withdrawing funds upon the death of the owner. Retirement accounts vary on how quickly the funds have to be withdrawn and how much tax your beneficiaries must pay on the funds as they are withdrawn. Understanding your personal retirement account and your overall estate plan can play a huge role in determining the best way to administer your estate.

For example, if your estate is large enough to pay the "death tax" and much of your liquid assets are in a retirement account, your estate may have to use your retirement account -- at a disadvantage to your beneficiaries -- in order to meet its tax obligation. Planning for such situations can reduce the tax obligations of both your estate and your beneficiaries.

Beneficiaries and Taxes

Naming your spouse as the beneficiary of your retirement account is often a good choice. A spouse can rollover your retirement account to his or her own retirement plan, allowing for tax-free growth until he or she reaches the age of 70.5. Depending on your account, other relatives may also stretch out the withdrawal of retirement account funds over the period of their life expectancy, which provides for tax-free growth for any funds remaining.

Charitable donations forego income taxes entirely, as 501(c)(3) organizations do not have to pay income taxes at all. A charitable donation also reduces the size of your estate, which could help reduce its tax burden.

You must also decide if the beneficiary of your retirement account should be a trust. Naming a trust as beneficiary is crucial in certain circumstances, such as if you want to provide for a special-needs child using your retirement account.

Contact an Estate Planning Attorney

The tax implications of a retirement account are numerous and vary depending upon an individual's particular plan. Contact an experienced estate planning attorney to discuss your options regarding your retirement account.

Article provided by Berman & Asbel, LLP
Visit us at http://www.estateplanning-ssdi.com

ELSE PRESS RELEASES FROM THIS DATE:

Types of Florida Alimony Awards

2012-11-28

Types of Florida alimony awards Even after a marriage ends, the obligation of one ex-spouse to the other may continue for years, or even a lifetime. Florida courts may grant alimony as a part of marriage dissolution proceedings. Alimony, which is support paid from one ex-spouse to the other, comes in several different varieties. Some alimony awards are permanent, while others are intended to last only until the person receiving the alimonycan be self-supporting. Bridge-the-gap alimony To help transition from married to single life, some ex-spouses receive bridge-the-gap ...

Study Says Your Doctor May Not Always Tell You The Whole Truth

2012-11-28

Study says your doctor may not always tell you the whole truth The doctor-patient relationship can be a complicated one, as it often occurs at a stressful and busy time for the doctor and the patient. Doctors are human like everyone else and therefore have the same emotions and frailties. Just like in any other human-to-human relationship, there is sometimes a temptation to lie or keep secrets. A recent survey highlighted the fact that not all doctors believe that being honest and forthright with their patients is the best course of action. The survey, published in ...

Is Pennsylvania's Accelerated Rehabilitative Disposition Right for You?

2012-11-28

Is Pennsylvania's Accelerated Rehabilitative Disposition right for you? Success can be defined a number of ways in criminal defense cases. Sometimes, an accused person might be completely acquitted of the charges. A more common way to achieve success, however, is to evaluate all of the factors in the case and then work to reach an outcome that minimizes the negative consequences to the accused person. One of the benefits of working with an experienced criminal defense lawyer is that a lawyer can help an accused person identify and pursue alternative resolution options. ...

Planning ahead and preparing a prenuptial agreement

2012-11-28

Planning ahead and preparing a prenuptial agreement Prenuptial agreements are often overlooked as useful estate planning and wealth protection documents. The reasons for ignoring these legal needs are not hard to understand, as few people want to contemplate getting a divorce or their own death. Yet rather than being a negative, creating a prenuptial agreement can provide for a family in the event of unexpected life circumstances. A prenuptial agreement can be viewed as a type of insurance policy; much like insurance, a spouse can plan for unforeseen events in the future ...

From Controversial to Party Worthy: The Evolution of Divorce in New York

2012-11-28

From Controversial to Party Worthy: The Evolution of Divorce in New York Times are changing. Although shows like Mad Men are a hit, viewers are not likely to return to many of the olden values of the fifties and sixties. In fact, Americans are continuing to evolve on how we view social issues that were once controversial. The latest example: Divorce Parties. According to a recent article in Time Magazine, Divorce Parties are the latest rage trending throughout New York. New York magazine even ran a story discussing how companies throughout the city are specializing ...

A Kansas Doctor's Plea Upheld by Federal Courts

2012-11-28

A Kansas Doctor's Plea Upheld by Federal Courts Recently, a Kansas doctor pled guilty to a crime and that plea is coming back to haunt him. The doctor is now coming forward to say that that plea was not accurate. A federal judge denied the doctor's claim and upheld the doctor's testimony as proof of his guilt. The Denial The doctor had earlier pled guilty to prescribing painkillers in an unlawful manner to a woman that he did not know according to an article in The Republic. When the doctor pled guilty, he stated that he was unaware of the consequences of doing ...

Rocco Leo Gaglioti to Host Heart and Sole

2012-11-28

Rocco Leo Gaglioti Host/Creator of Fashion News Live will be the Host of the Heart and Sole event on December 1, 2012 at Buzz Siler's Gallery in the very hip and fashionable Pearl District of downtown Portland, Oregon. Gaglioti, Fashion Expert and Celebrity personality, has been involved with many philanthropic causes, including the Miss and Mister Deaf International Pageant held this year in Ankara, Turkey and also, through the United Nations, The Clean Water Initiative Conference held in the Ukraine. Soles4Souls collects new shoes to give relief to the victims of ...

Australia Logo Design becomes Logo People as a New Brand Name

2012-11-28

Australia Logo Design has launched its New Brand Identity- Logo People. For the last 2 years, Australia Logo Design was carving a niche for itself in the field of logo and graphic design. Numerous custom made logos had been designed for Australian business companies giving them a unique brand identity. But since Australia Logo Design was a generic name. So in spite of prospering logo design work, we need to build a specific identity which is recognizable by media, clients, business collaborators and investors. Hence we decided on the name Logo People which will give ...

GamersRevenue Announces Their Week Long Sale on Video Games

2012-11-28

Steven Fitzpatrick, the founder of an online gaming community has officially launched their sale on old genre video games. While other game stores are offering sales on SELECT items, Mr. Fitzpatrick knows this is a trick to simply make people look at their store and that is why he is offering discounts on all of his inventory. While GamersRevenue.com was created on April of 2011, Steven has been selling video games for over 6 years. Not only does he sell video games, but he is also an avid gamer, starting when he was 7 years old - gaming is a passion that grew into his ...

Excel Software Ships LicenseCard 1.0 for Drag and Drop Software Activation

2012-11-28

Excel Software today announced LicenseCard 1.0 for Mac and Windows developers that create applications, plugins, protected documents or other types of commercial software. A custom image is delivered to the customer by email or web page during the purchase process. That image can be dropped onto the protected application to activate it. LicenseCard provides developers and customers with a very simple, non-intrusive way to instantly activate purchased software. It supports two license types, a Simple License and a Computer Unique License. During the purchase process, ...