Tax Advantages of an IRA

Tax Advantages of an IRA

 

IRAs and Roth IRAs are both accumulation and distribution vehicles.

Traditional IRAs continue to grow tax-deferred and Roth IRAs grow tax-free.

 

If IRAs are properly set up and administrated, an IRA can become a Multi-Generational legacy that allow “stretching” of the assets and required distributions beyond the life of the original owner.

 

This legacy plan is accomplished through a Multi-Generational IRA (MGIRA) strategy – individual beneficiaries can stretch inherited IRA distributions over their individual life expectancies.

 

When you inherit a traditional IRA, you only pay taxes on the actual annual distributions you receive while the remaining assets grow tax-deferred.

 

For those who inherit a Roth IRA, the assets grow tax-free and qualified distributions are tax-free!

 

Other potential IRA advantages include:

  • More estate planning options
  • Wider array of investment choices within the account
  • Simplified conversions to a Roth IRA
  • Plan portability
  • Account consolidation options

 

More Updates

IMPORTANT TRUST DEADLINE APPROACHING

For trusts that inherited an IRA in 2019, an important deadline is approaching. The due date to provide required trust documentation to the IRA custodian to ensure that the longest payout period possible is available for the inherited IRA is October 31, 2020. Generally, only individuals who are named on an IRA beneficiary form can

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admin October 27, 2020

CRDS AND ROTH CONVERSIONS – ABUSE OF THE RULES?

The coronavirus-related distribution (CRD) rules for Roth conversions have a gaping hole. An “affected person” (as we have defined in previous blogs), is entitled under the CARES Act to withdraw up to $100,000 from their IRA or workplace retirement plan. A CRD avoids the 10% early distribution penalty for those under 59 1/2, can be

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admin May 20, 2020

Rolling Over an RMD

Like most people’s lives, the retirement world is upside down. This is made evident by a single statement: “Required minimum distributions (RMDs) can be rolled over.” Yes, that is the new normal—at least for this year. RMDs are considered the first money out of an IRA and workplace plan. Typically, these dollars are ineligible to

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admin April 22, 2020
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