|
|
|
|
|
| YOUR RETIREMENT PLAN Because of the outstanding tax benefits granted to those who use IRA's, 401k's, 403b's, and other "qualified pension plans," these instruments have become very popular. Here, for purposes of convenience, we will refer to all these plans as an IRA. Most funds in these plans avoided income tax when they were placed into the fund ... and they grow tax-free. With rare exceptions, the IRA is such an outstanding device that we want to keep the money in it as long as possible, drawing money out only when we are forced, by circumstances or government rules, to do so. Do not put your IRA into a Living Revocable Trust. To place it into the trust, you must first remove the funds from the IRA, pay income taxes ... and then place the funds into the LRT. Also, be wary of those who would advise you to remove funds from your IRA to purchase insurance. Again, you have created a taxable event when you take funds out of the IRA. The IRA, when passing to a named beneficiary (person, trust or institution), does not go through probate. But, at your death, the funds can be highly taxed. They can be subject to state and federal income tax, state and federal death taxes and federal excise taxes. In many instances, IRA funds have been depleted by more than 75%. If the IRA names your spouse as a beneficiary, he or she can create a "Spousal Roll-Over IRA" and transfer the funds to that instrument without payment of any tax. The income is then taxed when he or she takes income. But, again, the death taxes can be substantial when the spouse dies. Because of the high tax rate on IRA's at death, many people are deciding to make their charitable cause the final beneficiary of the IRA. To name our institution in your IRA, you might acquire a "Change of
Beneficiary" form from your depository. Then, if you like, you can name
your spouse as the first beneficiary and |
|
