When people set up beneficiaries for their IRAs, they don’t know what the future holds. Assume a simple situation where the the IRA owner has two heirs—a spouse and a child. The IRA owner names a spouse as the primary beneficiary and their child as the contingent beneficiary. However, this may not be good if [...]
“Once thought to be relatively obscure, IRD deductions are becoming more common. Big-ticket IRD items such as distributions from IRAs, 401(k)s, 403(b)s, and other tax-sheltered retirement plans of affluent baby boomers have been growing in past decades and will be worth millions when owners bequeath them to estate beneficiaries. Distributions from these plans constitute gross [...]
Retirees of any age with large IRAs must understand that their IRAs can be hit with estate and income taxes when they die. And RMD rules could cause future income tax burdens while they are alive. However, IRA owners between ages 59½ and 70½ have a great opportunity to use the new tax law to [...]
That is not a bet you should make. For even if the tax goes away, the income tax “step-up-in-basis” provision for the most part goes away too. And beneficiaries could use life insurance to pay the capital gains tax on appreciated assets rather than liquidate the IRA. They’ll then have the opportunity to stretch the [...]
The Congress thought about this solution and they enacted the gift tax rules. Essentially, the gift tax rules limit the amount of gifts you can give annually and over your lifetime. If you exceed these limits, you, the giver, pay a tax. The recipient pays no taxes on gifts received. Each calendar year, you may [...]
The estate tax is a tax on accumulated wealth. So if you die and you are considered wealthy (by the estate tax rules then in effect), your estate is subject to tax. It’s the government’s way of making sure no family gets “too rich” by passing wealth from generation to generation. Your gross estate includes [...]
Even though there are no tax benefits, there may be circumstances when you want to name a trust as your IRA beneficiary. Trusts, however, create unique problems and tax complications even when executed perfectly. IRA trusts cannot provide the answers for tax and personal solutions that many IRA owners are looking for. And quite often [...]
You may think that it’s a nice thing to leave some of your unused retirement funds to charity when you go. Generally, this a good idea, and your heirs will love you for this as they save taxes. Assuming you die with $2, $1 in your IRA and $1 in your checking account, your heirs [...]
Given that you’re reading this book and you may not be a CPA or financial advisor, it indicates that you have a strange reading list and may have read other items on income taxes. If so, you have encountered one of IRS’ principals, “substance over form.” This is a principal that the IRS uses when [...]
Unfortunately, although BAPCPA has created an exemption for all types of retirement plans, the exemption for those plans is not unlimited in all cases. The catch is that, in the case of Roth and traditional IRAs, the maximum amount of the exemption is limited to an aggregate IRA account value of $1 million (adjusted every [...]
