The retirement plan (ie pension scheme, 401 (k) system, IRA system established by employer, etc.) accounts for most of the assets held by most Americans. A plan that fulfills the specific legal requirements stipulated by the Federal ERISA Act promotes growth and applies a preferred tax system to provide severance payments for account holders. For example, an account holder can defer dividends from retirement accounts until the calendar year reaching 70-1 / 2 years, during which the account is exempt from tax. When the account holder reaches 70-1 / 2 years old, it is necessary to start collecting the minimum necessary contribution amount (MRD), and the contribution is subject to income tax.
However, the tax advantage of the retirement account does not benefit the heir or designated beneficiary, with one exception, after the account holder dies. If the account holder designates the spouse as a beneficiary of the retirement account, the surviving spouse at the time of death of the account holder which one Transfer deceased accounts to your account Or We are receiving the benefits of accounts and incentives claimed to be distributing until the calendar year when the age of the deceased spouse reaches 70 - 1/2.
However, if the recipient of the retirement plan is a non-spouse who is alive, the real estate plan will be more complicated. In that case, beneficiaries are required to take MRD for a period of 5 years, or beyond the beneficiary's life expectancy (sometimes referred to as the "stretch period"). If the trust is a designated beneficiary of the retirement refusal account and all trust beneficiary rights are individuals, the MRD is calculated according to the beneficiary with the shortest beneficiary (ie the longest beneficiary).
Given the requirements of ERISA and the regulations issued by the Internal Revenue Service, all the subjects of retirement planning are very technical. Likewise, incorporating individual retirement pension assets into your own real estate plan may be a complicated act. The issues to consider are as follows.
1. How do you maximize the stretch period so that the assets of retirement accounts can continue tax-exempt growth for the maximum time?
2. Confirm that the asset is protected from the creditors of the beneficiary. Then,
3. Provide a structure for the distribution of severance payment (eg restrict expenditure to prevent retirees from wasting funds in vain).
Please consider the above problem before proceeding with your real estate plan.
© June 12, 2012 Hunt & Associates, PC All rights reserved.
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