Building your wealth
3 ways to avoid Uncle Sam becoming your biggest beneficiary
Building your wealth
3 ways to avoid Uncle Sam becoming your biggest beneficiary
With the recent passage of the SECURE Act, a lot of attention has been given to the benefit granted to retirees to delay their required minimum distribution till age 72, previously 70 1/2. While this added flexibility is certainly a welcome change for people with IRAs, the Act also contained a tradeoff that may have a bigger impact for some retirees. The SECURE Act also eliminated the Stretch IRA option for non-spousal beneficiaries. In years past, if anyone other than your spouse inherited your IRA or 401(k), they had to take distributions starting the year after they inherited the assets, regardless of age.
However, the amount that was required to be withdrawn was determined by their age. Therefore, the younger your beneficiary, the lower the percentage they had to take out and pay taxes on. The new rules give beneficiaries of IRA or 401(k) assets a 10-year window to deplete the entire account or accounts now. Here are three strategies to consider to maximize your estate or limit your or your beneficiaries’ tax bill.
With the vast majority of tax payers taking the standard deduction, the ability to itemize charitable contributions has less appeal. Using a QCD to have your RMD go directly to a qualified charity will still give you the tax benefits of a charitable contribution and full benefit of the larger standard deduction.
A lot of focus in planning is set to getting to retirement, however we know financial goals for many people do not stop there. Using these strategies can help achieve many of your financial ambitions in a more tax efficient manner. While everyone’s situation is different, it is important to consult with a financial planner or tax professional to see what strategy or combination of strategies works best for your particular circumstances.
This article was written by David Kudla from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.
The contents in this article are being provided for educational and informational purposes only. The information and comments are not the views or opinions of Union Bank, its subsidiaries or affiliates.
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