IRA and Tax Planning

Maryland IRA and Tax Planning Attorneys Guiding you to a Comfortable Retirement and Effective Estate Plan

IRA and Tax Planning – Linked to Effective Retirement and Estate Planning

You have made enough money to put a bit aside for retirement.  You deserve the ability to enjoy this money during your retirement, and maybe have something left over to pass on to your loved ones.  But in order to get to that point, you will almost certainly have to utilize IRA and Tax Planning tools in the process.

IRAs (“individual retirement accounts”) are often the most effective tax and estate planning financial tool you can utilize. However, there are different types of IRAs and unique tax treatment rules for each one. Therefore, it is critical to consult with experienced professionals when creating an IRA.  Our attorneys carefully review your retirement and estate plans to determine the best course of action for you. We’re also more than happy to work alongside your other trusted advisors along the way.

Tax Treatment Varies Based Upon Which IRA You Choose

The most basic types of IRA are a Traditional IRA and a Roth IRA. The most significant distinction between the two is the tax treatment distinction. Traditional IRAs are not taxed when income is placed directly into the account. Rather, taxes are deferred until retirement. In a Roth IRA, you may only contribute income which is already taxed, but then your money grows tax free. Deciding which IRA to use in your estate plan is an important and nuanced decision. There are also rules regarding what types of assets you can place in an IRA – especially income-earning assets. Gary Altman, the founder of Altman & Associates, is a Certified Financial Planner™ – as well as one of the most experienced estate planning attorneys in the Washington, D.C. Metro area. He, along with the Altman team, can help you understand what types of assets will benefit the most from favorable tax treatment under various types of IRAs.

What are CRUTs and CRATs, and why might I have heard more about them?

There are a lot of strange acronyms flying around the IRA and tax planning fields these days. If you have a strong retirement portfolio of securities like stocks or mutual funds, or you would like to, you may have heard someone reference “CRUTs and CRATs,” or the even more exotic-sounding ‘Flip CRUTs, NIMCRUTs, or NICRUTs.” No, the person communicating these sounds is not mimicking a Neanderthal. Instead, they are trying to explain a new retirement and tax planning focus triggered by an increase in capital gains tax. Starting in 2013, the amount of tax paid on long term capital gains rose significantly. This impacted the potential sale and gain on valuable long term assets such as stock and collectibles. As a result, charitable remainder unitrusts (CRUTS) and charitable remainder annuity trusts (CRATs) have become popular again for those with significant income and assets.

For those who are blessed with significant income and assets, CRUTs and CRATs offer a way to have your valuable assets taxed less during your lifetime. These toolscan provide you with a steady income stream, and provide a means for charitable giving after you pass away. As a basic premise, the asset which would be subject to regular capital gains tax is placed into the CRUT or CRAT. The asset can then be sold and the capital gains tax is avoided, provided that: (1) at least 10% of the original value of the asset is reserved for a charity, and (2) the remaining balance is paid out over the life of the beneficiary. This is an over-simplified explanation, but we can help you understand CRUTs, CRATs, other related trusts, and how traditional and Roth IRAs can work within these concepts.

Maryland IRA and tax planning attorneys help you understand complex planning concepts and regulations

Effectively planning for your retirement and estatemay seem like learning a different language. But the service-oriented Maryland estate planning attorneys at Altman & Associates work with you to understand which options work best for you and your loved ones. Rely on our expertise and come up with an IRA and tax planning strategy today. We have convenient office locations in Columbia and Rockville. Contact us by phone at (301) 468-3220 or online to schedule a consultation.


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