Stretch IRA'S
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Stretch IRA'S

Individual retirement accounts (IRAs) have become a mainstream investment vehicle since their introduction by the Employee Retirement Income Security Act in 1974. IRAs were designed to help individuals without access to a workplace retirement savings plan, providing them with a tax-favored way to accumulate money for the future. In fact, since many investors use IRAs to roll over assets from 401(k) plans when changing employment or retiring, IRAs are now the dominant vehicle for retirement savings.

IRA

How it works: Maximizing the life of your IRA

While account owners are always free to withdraw as much as they want (subject to tax and potential penalty) from an IRA, federal tax law requires that owners of a Traditional IRA take required minimum distributions (RMDs) when they reach age 70 1/2.

The same requirement applies to SEPs, SARSEPs, and SIMPLE IRAs. Participants in qualified employer-based retirement plans, such as 401(k) plans, are subject to similar rules as well.

For most IRA owners, the rules require RMDs to be based on remaining life expectancy and paid out over a period of years determined by using the IRS Uniform Lifetime Table. Annual RMDs are generally calculated by dividing the balance of the IRA account as of December 31 of the previous year by the IRS life expectancy factor.

If an IRA owner has designated a spouse as sole beneficiary and the spouse is more than 10 years younger than the account owner, RMDs can be calculated based on the actual joint life expectancy of the owner and spouse.

After an IRA owner dies, federal tax law requires beneficiaries to withdraw a specific minimum amount each year.

To maximize the life of the IRA and defer taxes on those assets for as long as possible, account owners may want to withdraw as little as possible for as long as the rules permit

Contact Thomas Gucciardi at 954-804-4381.  He will assist you to make sure your children don't inherit a massive tax burden.  They must re-invest the qualified money (IRA) properly.

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