Don't Forget About Your Beneficiaries
What’s your legacy plan? This is a question that I often ask my clients. I ask this for many reasons, but the main reason is to get them thinking about what happens when they are not here. Have they taken care care of their wills, life insurance polices, and for this discussion: retirement plan beneficiaries. I’ve already shared a few stories on the importance of your beneficiary designations, but I can’t stress this enough. This time I want to focus on retirement plans- specifically, IRA’s, and 401k’s.
Since their introduction in the early 1970s, Individual Retirement Arrangements (IRAs) and qualified plan assets such as 401(k), 403(b), and 457 plans have become an important component of many investors’ retirement plans. While the intent of these accounts is to supplement Social Security and provide income during retirement, many affluent investors may not need or be able to spend all of the money in their retirement accounts. This creates an opportunity to leave these accounts for the benefit of heirs. This post outlines the fundamentals of beneficiary designations which are important not only in terms of leaving a legacy but also to ensure that estate and income taxes don’t unintentionally consume retirement plan assets. It should be noted that a full discussion of the tax impact of such designations is beyond the scope of this post; investors should seek appropriate counsel prior to making any investment or tax decision. […]
