Helping you in stretching your inherited retirement assets ira
Benefits of setting up an Inherited IRA For Bayarea reisidents, NorthernCalifornia: Contact Connie Dello Buono, CA Life Lic 0G60621 408-854-1883 firstname.lastname@example.org www.modern-woodmen.org
Why would a Roth IRA beneficiary want to establish an Inherited Roth IRA when they could take a lump-sum withdrawal income tax-free?• An Inherited Roth IRA will allow the money to continue to grow while maintaining the ability to receive income tax-free withdrawals.
Why set up an Inherited Traditional IRA if the beneficiary can take a lump-sum withdrawal without the 10 percent premature distribution penalty?• The beneficiary may not want to pay income taxes on all of the proceeds in just one year. An Inherited Traditional IRA allows a beneficiary to keep the money growing tax-deferred while maintaining the ability to receive withdrawals without the 10 percent premature distribution penalty.
What if the owner of a Roth IRA dies beforesatisfying the five tax-year requirement forincome tax-free distributions?The beneficiary could establish an InheritedRoth IRA and start receiving their requiredminimum distributions. After the five tax-yearrequirement has been met, their withdrawalswould then qualify for income tax-freedistributions.
Why would a spouse beneficiary set up anInherited IRA when they could roll over theproceeds to their own IRA?Withdrawals from an Inherited IRA are not subjectto the 10 percent premature distributionpenalty. This may appeal to a spouse beneficiarywho is under age 591⁄2 and is in need of income. Ifa surviving spouse is under age 591⁄2 and rollsover the deceased spouse’s account to their ownIRA, any withdrawal from the IRA will be subjectto the 10 percent premature distribution penalty.
If an Inherited IRA would allow a spousebeneficiary to receive income without a10 percent penalty, why would the spousebeneficiary roll over the deceased spouse’splan to their own IRA?The spouse beneficiary does not need themoney and is willing to let the money growin the IRA. Their income will be provided byother sources, such as the proceeds from thelife insurance that was in force at the timethe other spouse passed away.
Remember: Indirect "60-day"rollovers are not allowed for Inherited IRAs. The money must be moved by a direct transfer or direct rollover.
Inherited IRAs with Modern Note: Inherited Roth IRAs may Woodmen“You will be required to take a qualify for income tax-free distribution every year based on distributions. your life expectancy.” “The balance that stays inside theNote: In the event the beneficiary is Inherited IRA will continue to older than the deceased and the grow tax-deferred.” deceased died on or after April 1 of the year after attaining age “You have the ability to receive 701⁄2, the life expectancy withdrawals exceeding the payments will be based on the required withdrawal amount. age of the deceased. This will be rare. These withdrawals will also be“The required withdrawal amount subject to ordinary income will be subject to ordinary income taxes but not the 10 percent taxes but not the 10 percent penalty for distributions penalty for premature distributions received before age received before age 591⁄2.” 591⁄2.”
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