Planning for the future is essential, especially when it comes to your retirement assets. At Wilcox Attorneys, PA, we understand the importance of ensuring your IRA passes on according to your wishes. Our experienced IRA inheritance planning team in Fayetteville, Arkansas, is here to guide you through every step of IRA inheritance planning.
Using Money from a Retirement Account
Once you reach a certain age, you must start using the money from your retirement account, such as an IRA. Currently, by April 1st following the year you turn 70.5, you are required to begin withdrawing funds. However, you do not need to empty the account. Instead, there are minimum withdrawal rules you must follow each year. The remaining balance can be bequeathed to your chosen beneficiary upon your death.
Naming a Beneficiary
When planning for IRA inheritance, you have several options for naming a beneficiary:
- Your spouse, if you are married
- Your child
- Your grandchild or another individual
- A trust
- A charity
You can also designate a combination of the above as beneficiaries of your IRA.
Naming a Spouse as a Beneficiary
Most married individuals name their spouse as the beneficiary of their IRA. This approach provides financial support for the surviving spouse and offers the benefit of a spousal rollover. The spousal rollover rule allows your surviving spouse to roll over your IRA into their own IRA if they are under 70.5 years old at the time of your death, providing more years of tax-deferred growth.
Naming a Child, Grandchild, or Other Individual as a Beneficiary
When you name a trust as the beneficiary, the trust receives the IRA proceeds and follows specific instructions on how to use the money and who can use it. This option prevents direct payment of the proceeds to an individual. This option allows for continued tax-deferred growth due to the younger age of the beneficiary. However, this approach has a drawback: the beneficiary can withdraw all the money and use it at their discretion, potentially disrupting your planned legacy.
Naming a Trust as a Beneficiary
Creating and naming a trust as the beneficiary of your IRA gives you total control over the use of tax-deferred money after your death. When you designate a trust as the beneficiary, it receives the IRA proceeds and follows specific instructions on how the money will be used and who may benefit from it. This option prevents direct payment of the proceeds to an individual.
Naming a Charity as a Beneficiary
Leaving your IRA to a charity has several advantages. The charity will receive the money tax-free, and the IRA will not be included in your estate, potentially reducing estate taxes for your family.
Contact Our Estate Planning Attorneys Today
IRA inheritance planning is an essential part of any estate plan. The knowledgeable team at Wilcox Attorneys, PA is here to answer all your questions and guide you through the process. Schedule a consultation with our team in Fayetteville today.
Contact us at (479) 443–0062 or visit our contact page to begin planning for your future. You can also learn more about our experienced estate planning attorneys on our staff page. Let us help you secure your legacy with comprehensive IRA inheritance planning.