Tax Tip of the Week
900 N. Kings Highway, Cherry Hill, New Jersey 08034
856.667.4100 ·
215.563.0276 ·
Fax: 856.667.3652
Avoid IRA beneficiary blunders
For the week of
August 6, 2001
Earlier this year, the IRS announced new rules for retirement plans. Now you can
change your IRA beneficiary anytime, even after you've begun taking distributions.
Why is your beneficiary designation important? It's important because whoever inherits your IRA inherits the income
tax burden that goes along with it.
Is your IRA paperwork up to date?
- Have you named a beneficiary? If your
paperwork is incomplete, your intended beneficiary may not end up with your IRA. That could speed up the income
tax due on your IRA following your death.
- Are your beneficiary choices still appropriate? Update choices that have become obsolete (due to a divorce or death, for example).
- Have you named a "contingent" or secondary beneficiary? This provides tax planning opportunities for your executor. Also, if your primary beneficiary
dies before you have a chance to update the paperwork, you'll have your bases covered.
- Have you considered the tax implications associated with your beneficiary choice? You might be inclined to name your spouse as your beneficiary. However, leaving your IRA
to a younger family member will generally allow the account to grow tax-deferred for a longer period of time.
Perhaps you want to leave something to your favorite charity or church. If that's the case, consider naming the charity as your IRA beneficiary and leaving other assets to family members. A qualified charity doesn't pay income tax, but your heirs will eventually pay tax on an inherited IRA.
The new IRS rules present new tax-saving opportunities. Call us to discuss how
they affect your situation. We are here to assist you with your long-term planning.
Click here to view previous
tax tips.
"Tax Tips" are published weekly to
provide useful tax information. Return to this site every week for helpful tax-cutting suggestions, tax reminders,
and current tax information.
The information contained in this site is of a general nature and should not be acted upon in your specific situation
without further details and/or professional assistance.
If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list
to receive other tax-cutting information from time to time, please contact our office. We're here to help.
