According to the Investment Company Institute, it is estimated that there is over $20 trillion in retirement accounts as of December 30, 2013. Retirement accounts make up the majority of many people’s assets and unfortunately, many owners of IRAs and their financial advisors are not fully aware of the complicated tax laws regarding distributions of these retirement accounts.
Many people focus on the investments within these accounts and their returns, which are very important, but they overlook the important strategies that can save investors and their heirs’ money in the long run.
Retirement accounts are different!
People often forget that retirement accounts have to be in the name of an individual and that the beneficiary designation will override any other estate planning document such as your trust, will, etc. Therefore, it is imperative that you separate the retirement accounts from any other part of your estate when establishing a proper plan for distribution of these assets.
The rules regarding these retirement accounts or IRAs can be very complex and cause many mistakes.
Many times, financial professionals refer to IRAs as “Individual Riddle Accounts” because they are significantly different from most other assets in your estate plan.
On my next blog post I’ll explain some of the differences.
– Jim Lange