IRA and Retirement Planning

Maryland IRA and Retirement Planning Attorneys Guide You to a Prosperous Future

Understanding your retirement options in a complex tax structure

Everyone looks forward to retirement, but many do not understand how to best prepare for a lifestyle without a regular paycheck. There are many questions surrounding retirement planning which the average person may not know the answers to.  Gary Altman, the founder of  Altman & Associates, is also a Certified Financial Planner™ and he can answer questions regarding your unique retirement planning needs. Additionally, the attorneys at Altman & Associates can assist you in setting up the right financial structure and estate plan that works with your family situation and retirement planning. You deserve to have the right team of highly-experienced professionals working to maximize the potential of your golden years, while protecting your assets for your family.

What is an IRA?

IRA stands for “individual retirement account.” This is an account that you can establish with financial institutions for the purposes of retirement. Because an IRA is specifically designed to hold assets and accumulate returns on earnings for retirement, IRAs receive unique tax treatment.  In a Traditional IRA, you can save money directly and defer taxes until you retire. In a Roth IRA, you can save income that has already been taxed, with no additional taxes in the future.

Depending on your retirement needs and preferences, an IRA can help you secure an enjoyable retirement. Because of their growing popularity, you should check to see whether your employer has a retirement plan in place which has many of the same features of a Traditional IRA or Roth IRA.  For some, this arrangement works better because the money is automatically taxed and set aside without any action on their part.  Moreover, some employers will set aside money for your retirement.  For others, maximizing their return on investment through a Roth IRA is worth the time and attention it takes to determine whether contributing to a Roth IRA makes sense or whether it makes sense to convert a Traditional IRA to a Roth IRA.  There are many other details regarding IRAs and factors that you should consider. But with the right guidance and assistance, IRAs are a fantastic retirement savings tool.

IRAs and Estate Planning

At some point, you will need to decide who will receive your IRA when you die.  This is a complex decision because of the income tax consequences of inheriting an IRA. Moreover, leaving an IRA to a minor child or grandchild requires careful planning to make sure that the IRA is not redeemed sooner than necessary and to insure that the IRA is not controlled by a court on behalf of the minor child or grandchild.   Deciding the property beneficiary designation for your IRA must be determined as part of your overall estate plan.

There are other important considerations to be given to the naming of your beneficiary for an IRA.  If you are married, there are many good reasons to name your spouse as your beneficiary and most people do.  However, this may not be appropriate if you are in a blended family relationship.  Some people are concerned that their spouses would roll over the money to their own IRA and name their own children as the beneficiaries. A solution to this concern could be to create a Standalone IRA Trust and name it as the beneficiary for your IRA.

Many people never update or change their beneficiary designations on their retirement plans.  Failure to do so can result in many an unintended consequence.  In addition, people name their minor children as the contingent beneficiaries only to see those children receiving benefits by age 18. Others name a trust as the beneficiary, but have failed to make certain that the trust qualifies under the IRS regulations.  At Altman & Associates as part of our estate planning engagement process we work with clients to make sure their beneficiary designations are correct ensuring that the right people will get the benefits of the plan. The IRA and retirement planning attorneys at Altman & Associates are highly-experienced in ensuring that you take the right steps so that you can coordinate your IRA beneficiary designation with your overall estate plan.

Standalone IRA Trusts

If you engage in proper, responsible retirement and estate planning, then you should have a considerable amount of funds left in your IRA as you near the end of your life. This is one example of why retirement planning is closely tied to estate planning.   The most crucial question is determing who the beneficiary of the IRA should be.  Naming your estate or your Living Trust to be the beneficiary could result in the IRA being paid out over a relatively short period of time, rather than over the lifetime of the beneficiaries.  If this happens, it can result in a heavy income tax burden and possible significant penalities.  For these reasons, Standalone IRA Trusts, or Beneficiary/Inherited IRA Trusts, may be more appropriate.

Though Standalone IRAs have traditionally received much better tax treatment (by allowing the IRA to be out over the lifetime of the beneficiary of the Standalone IRA Trust), the U.S. Supreme Court has further strengthened the advantages of the Standalone IRA Trust by finding that an inherited IRA is not protected from the claims of the creditors of the beneficiary of the inherited IRA.  Instead, by making a Standalone IRA Trust to be the beneficiary of your IRA , the IRA is protected from the beneficiary’s creditors, while still allowing for the “stretch” of the IRA over the lifetime of the beneficiary of the Standalone IRA Trust.

Consequently, the benefits of a Standalone IRA Trust include:  probate avoidance, creditor protection and making sure that the IRA is paid to your desired beneficiaries, while still allowing the beneficiary of the Standalone IRA Trust to withdraw the IRA over his or her lifetime.  The Maryland Standalone IRA trust attorneys at Altman & Associates will assist you in finding the right balance between retirement planning and estate planning.

Contact knowledgeable Maryland retirement planning attorneys today for sound guidance

It’s your future. With hard work and the right guidance, you can make your retirement a dream come true. The Maryland IRA and retirement planning attorneys at Altman & Associates understand the intricacies of planning for a successful retirement and building a legacy. Let us help you take the next step. 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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