3 Things You Must Know About Inheriting an IRA

Inherited IRA RulesWith the exception of financial experts, deciphering the rules of individual retirement accounts can often leave a person confused and frustrated.

Actually, scratch that.

Even financial experts can get stumped on the inherited IRA rules.

While the gist of most IRAs is relatively easy to comprehend, once a person begins investigating the rules – requirements and exclusions – things tend to get a bit tricky.

This becomes even more apparent when you find yourself named as a beneficiary of an IRA from a friend or family member who has passed.

Inherited IRAs constitute some of the largest assets left in an estate.

For this reason any heirs who find themselves in a position of deciding what to do with an inherited IRA should think carefully about all the options before making their final decision.

I’ve had many clients that have been faced with this very decision.

Most are tempted to just cash it in and buy <fill in the blank> which is usually some item they just don’t flat out need.

Please don’t be this person.

Since this decision can have a huge impact on your own personal finances (in both positive and negative ways) most beneficiaries will benefit by consulting with a tax professional or financial advisor experienced in this area.
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Spousal IRA Contribution Rules

Till Death Do Us Part.  When a couple join in holy matrimony, there are many new discoveries awaiting them.  When it comes to their finances, there are potential to be some added benefits: joint checking accounts for consolidated record keeping, joint tax filing status, and lastly; the ability to contribute for a non-working spouse to contribute to their IRA.  Ahhhh….isn’t marriage bliss? There are special rules and restrictions that apply to spousal contributions to IRAs that should also be considered when selecting an IRA for your family.  Here we look at some of those rules to help you make an informed decision regarding your IRA account.
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How To Stretch Out an IRA For Your Beneficiaries

Stretch IRAIf you don’t expect to deplete the assets in an IRA during retirement, then it’s a good idea to determine the most efficient way of transferring the account balance to your heirs in a manner that preserves the account’s tax-deferred growth potential for as long as possible.

For many Americans, transferring wealth with a multi-generational stretch IRA can be an ideal solution.

By naming a younger individual as the beneficiary, he or she will be able to stretch the life of the IRA by making (smaller) required withdrawals based on his or her (longer) life expectancy.

With a “stretch IRA” strategy, more money can then remain in the IRA with the potential for continued tax-deferred growth.

For those who do not currently have any IRA beneficiaries, the stretch technique could provide significantly greater long-term benefits than simply allowing the account balance to be paid out to your estate as a taxable lump-sum distribution.

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