IRA

Four Essential Inherited IRA Rules That Beneficiaries Should Know

If you are like one of many people who inherited an individual retirement account (IRA) this year, you likely have countless questions involving estate planning and taxes. While it can be a financial advantage to inherit an IRA account, there are still taxes to worry about, and making one wrong decision can raise the attention of the Internal Revenue Service. Some people decide not to make any decisions on how to handle an IRA account without first speaking with a knowledgeable estate planning attorney. It can also help to understand some vital but often overlooked rules addressing how IRA accounts must be handled.    Do Not Forget About Year-of-Death Distributions   One challenge presented by IRAs is deciding if its creator took a required minimum distribution in the year that he or she passed away. If the creator failed to take a required minimum distribution this year, the beneficiary must make sure this requirement is met. Remember, however, if the creator had not reached the age of 70 and a half by the time he or she passed away, there is no year-of-death required distribution.    Your Situation Influences How You Handle the IRA   If you inherited an IRA, [...]

2020-07-27T17:38:03+00:00Tags: , , , |

Are Inherited IRAs Protected From Creditors?

Most people who file for bankruptcy automatically think of their Individual Retirement Account (IRA) and 401(k) accounts as the most common type of assets that are exempt from being lost in bankruptcy and kept safe from creditors. As a result, many people believe that they will be allowed to exit the bankruptcy process with their retirement accounts untouched, which will greatly facilitate making a fresh start. The answer, however, is much more complicated if an IRA is inherited. If a person inherits the IRA from a spouse, however, the IRA will not qualify as exempt from bankruptcy and as a result will subject to collection efforts from creditors. In 2014, the Supreme Court issued a ruling in the case of Clark v. Rameker that an inherited IRA someone other than a spouse is not classified as a bankruptcy exemption. In drawing the distinctions between inherited IRAs and participant owned IRAs, the court noted three differences - the beneficiary of an inherited IRA cannot make additional contributions to the account but a participant IRA, an inherited IRA beneficiary must take required minimum distributions from the account but an IRA owner can defer distribution until the age of 70 and ½, and [...]

2018-06-19T19:31:04+00:00Tags: , , |