IRA Tag Archives — Page 2 of 5 — Houston Estate Planning and Elder Law Attorney Blog

What Single Parents Need to Know About Estate Planning

Published on: June 12, 2019 | By McCulloch & Miller, PLLC

Estate planning requires making some of the most important decisions a parent can make for their child’s well-being.

Single parents need to plan in advance for what will happen to their children, whether they are minors or adults. That includes preparing for the parent’s incapacity, as much as it does for their passing.

Talk to a qualified estate planning attorney and let him or her know your overall perspective about your children, and what you see as their capabilities and limitations. This information can frequently determine whether you restrict their access to funds and how long those limitations should be in place, in the event you’re no longer around.

Finished Your Will? Your Estate Plan’s Not Done Yet

Published on: June 7, 2019 | By McCulloch & Miller, PLLC

Asset titling is the sticking point, where many estate plans fail. The best plan can be undone, if assets are not retitled or accounts are not funded.

Retitling assets means just that—changing the name of the asset, whether it’s a deed to a home or a name of an insurance policy. If assets are not retitled to conform to the estate plan, they won’t be protected or won’t be distributed as you and your estate attorney had planned.

Forbes’ recent article, “For Estate Plan To Work As Intended, Assets Must Be Properly Titled” notes that with the exception of the choice of potential guardians for children, the most important function of a will is to make certain that the transfer of assets to beneficiaries is the way you intended.

How will the SECURE Act Impact the Stretch IRA?

Published on: May 10, 2019 | By McCulloch & Miller, PLLC

The emphasis on the SECURE act is all about helping Americans save more for retirement. However, it may eliminate a strategy that is used by many to pass wealth across generations.

The coverage of the SECURE Act, that has been passed by the House Ways and Means Committee, is garnering considerable attention, because of its focus on helping Americans save more for retirement. One provision would require employers with 401(k) plans to make the plans available to long-term part-time workers. The $500 tax credit for small companies that open retirement plans with an automatic enrollment feature is also a popular provision.

However, as CNBC reports in its recent article “Congress may gut the 'stretch IRA' that wealthy people love,” the also bill includes a provision that would force non-spouse beneficiaries to draw down inherited retirement accounts within 10 years of the original owner's death.

Catching Up in Retirement Savings Later in Life

Published on: May 9, 2019 | By McCulloch & Miller, PLLC

Nearly half of American households older than 55 have no retirement savings. The U.S. Government Accountability Office says that this number is actually better than in the past.

According to the article from CNBC, “These people are on the verge of retiring—and they have nothing saved,” an analysis of the Federal Reserve’s Survey of Consumer Finances shows that 52 percent of households had nothing saved for retirement in 2013. The number is now at 48 percent. It is not much of an improvement.

If your household is behind on retirement savings, here’s what you can do:

Tax Traps Can Ruin IRA Status

Published on: March 20, 2019 | By McCulloch & Miller, PLLC

You may know that there are tax traps when IRA withdrawals or rollovers are done incorrectly. However, did you know that an investment portfolio could contain a tax trap that could ruin your IRA status?

The most frequently occurring IRA tax trap comes from tax bills through the Unrelated Business Taxable Income (UBTI). Sources of business income from stocks, bonds and funds like interest income, capital gains and dividends are exempt from UBTI and a related tax, the Related Business Income Tax.

Fox Business’s recent article, “Your IRA and taxes: Don't get a surprise tax bill” explains that IRAs that operate a business, have certain types of rental income, or receive income through certain partnerships will be taxed, when the total UBTI exceeds $1,000. This is to prevent tax-exempt entities from gaining an unfair advantage on regularly taxed business entities.

How Will I Know When I Can Afford to Retire?

Published on: March 11, 2019 | By McCulloch & Miller, PLLC

The period before retirement is a time when people dream about what the future might hold. They also worry, because who hasn’t heard the stories about retirees who return to work because they retired too early?

It’s no surprise then that little more than half of Americans surveyed by the Transamerica Center for Retirement Studies say their biggest concern about retirement is outliving their money. The nature of retirement, when we start taking money out of those retirement accounts, after a lifetime of putting money into the accounts, seems a little scary.

Here are the key indicators that you’re probably ready to retire, according to this recent article from Investopedia’s, “6 Signs That You Are OK to Retire.”

How Life Insurance Works Best in an Estate Plan

Published on: February 15, 2019 | By McCulloch & Miller, PLLC

Life insurance can help heirs avoid having to incur expenses like estate taxes, funeral costs and similar expenses. However, it also gives heirs breathing room, so they can make the best use of other assets.

Here is an example of how life insurance should work. A father, Howie, dies and leaves a large estate to daughter Eva. The estate is large enough that it triggers a huge estate tax. However, the bulk of his assets are tied up in an IRA and real estate properties, some of which could be put on the market quickly, but not quickly enough for tax deadlines.

With that scenario, Eva might not want to immediately force a sale of the real estate. However, if she accesses the inherited IRA to raise money, she’ll have to pay income tax on the withdrawal and lose a terrific opportunity for extended tax deferral.

How to Make Your Charitable Giving Have a Greater Impact

Published on: February 1, 2019 | By McCulloch & Miller, PLLC

Most donations are made in December, and charities of all shapes and sizes make the most of the holiday spirit. However, by taking a bit of time to plan out charitable giving, including doing some research and talking with your family about your legacy, your giving could have a greater impact this year and in years to come.

A rough ride in the start of the year’s markets and changes to the tax laws have left many donors wondering if they can afford to be as generous in 2019, as they were in the past. Fundraisers advise donors to think more about what non-profits have greater meaning to them and to take a more thoughtful approach to giving. Philanthropy is still good for your legacy, sense of community and, when done right, taxes.

The Reno Gazette Journal’s article, “Get an early jump on charitable giving” looks at tax planning opportunities for charitable giving, specifically in light of the Tax Cuts and Jobs Act and Qualified Charitable Distributions (QCD). Here’s a review of why people give. The primary reasons for donating include the following:

The Difference Between Per Capita And Per Stirpes – Beneficiary Designations

Published on: January 17, 2019 | By McCulloch & Miller, PLLC

Out-of-date beneficiary designations could completely undo your entire estate plan. It happens often, since people often neglect these ‘fine print’ details.

We hope that you have a will to ensure that your assets are distributed according to your wishes after you pass. However, if you are like most Americans, many of your assets are not distributed through your will, but through a beneficiary designation, which you may have not thought about since opening up the account, retirement account, 401(k), IRA or SEP or taking out a life insurance policy. A word of warning: regardless of what’s in your will, the beneficiary designation takes precedence.

Benzinga’s recent article addresses this question: “Estate Planning: What Are Per Capita And Per Stirpes Beneficiary Designations?” Have you changed the beneficiary designations, since the account or policy was first started? If you need to update your beneficiary designation, talk to the company responsible for maintaining the account. They’ll send you a form to complete, sign and return. Keep a copy for your own records.

More Information Equals A Better Outcome in Retirement Planning

Published on: October 17, 2018 | By McCulloch & Miller, PLLC

Most people who work for a living dream of retirement. However, for many workers, the idea of retirement comes with its own worries. Will there be enough money? Will I be healthy enough to enjoy it?

Money and health are the two biggest worries about retirement. There are other unknowns: where will we live? How long will we be able to travel? What’s all this about paying estimated taxes, and how does Medicare work? Getting prepared for retirement will be less stressful, says the article “3 Ways to Approach Retirement More Confidently,” from The Motley Fool, if you follow these steps:

Start with a budget. The chances are that you don’t know how much money you spend every month. You’re working, money comes in and it goes out. However, if you know how much money you are spending, and what you are spending it on, you’ll be able to have a handle on how much money you’ll need for retirement. You’ll also be able to see where your discretionary dollars are going and make a conscious decision, as to whether those are dollars that should be going into long-term savings for your retirement.