Misconceptions About Inherited IRAs That Need to be Clarified

Joe Anderson, CFP® and "Big Al" Clopine, CPA share the biggest misconception about inherited IRAs that's costing families thousands of dollars. If you live in southern California and would like to schedule a free assessment with one of our CFP® professionals, click here: Make sure to subscribe to our channel for more helpful tips and stay tuned for the next episode of “Your Money, Your Wealth.” Channels & show times: IMPORTANT DISCLOSURES: • Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, Inc. A Registered Investment Advisor. • Pure Financial Advisors Inc. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations. • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. • Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. • All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. • Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors. #YourMoneyYourWealth #YMYW #YourMoneyYourWealthTV...(read more)

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An individual retirement account (IRA) is a type of savings account that provides tax advantages for retirement savings. It is common for people to name a beneficiary for their IRA, who will inherit the funds after their death. This type of account is referred to as an inherited IRA. However, there are many misconceptions about inherited IRAs that can lead to costly mistakes. Below are some of the biggest misconceptions about inherited IRAs. Misconception 1: You can treat an inherited IRA like your own. One of the most common mistakes people make with inherited IRAs is assuming that they can treat the account like their own. However, inherited IRAs are subject to different rules than traditional IRAs. The beneficiary cannot make contributions to the account and must begin taking required minimum distributions (RMDs) immediately, regardless of their age. Misconception 2: You can roll an inherited IRA into your own IRA. Inherited IRAs cannot be rolled over into a traditional or Roth IRA. If the beneficiary is the spouse of the original IRA owner, they may be able to roll the funds into their own IRA. However, if the beneficiary is not the spouse, they must either take distributions or transfer the funds to an inherited IRA in their own name. Misconception 3: You can choose when to take RMDs for an inherited IRA. Unlike traditional IRAs, which allow the account holder to choose when to take RMDs, inherited IRAs require immediate distributions. The beneficiary must take RMDs based on their own life expectancy or that of the original IRA owner, whichever is shorter. Failure to take RMDs can result in penalties and taxes. Misconception 4: You can use an inherited IRA however you want. The funds in an inherited IRA cannot be used for just any purpose. The beneficiary must use the funds for qualified expenses, such as education or medical expenses. Using the funds for non-qualified expenses can result in taxes and penalties. Misconception 5: You can name anyone as a beneficiary for an inherited IRA. While it is common to name a spouse or children as the beneficiary for an IRA, it is important to consider the tax implications of naming someone else. Non-spouse beneficiaries must take RMDs immediately and pay taxes on the distributions. Naming a charity as the beneficiary may be a better option if the individual wants to minimize taxes. In conclusion, inherited IRAs require careful consideration and planning to avoid costly mistakes. Beneficiaries should be aware of the rules and regulations that apply to inherited IRAs to ensure they are taking advantage of the tax benefits and avoiding unnecessary taxes and penalties. It is recommended to consult with a financial advisor or tax professional to navigate the complexities of inherited IRAs. https://inflationprotection.org/misconceptions-about-inherited-iras-that-need-to-be-clarified/?feed_id=94851&_unique_id=64564b18cc84d #Inflation #Retirement #GoldIRA #Wealth #Investing #401k #AlanClopine #beneficiary #estateplan #estateplanningmistakes #FinancialPlanning #individualretirementaccount #InheritanceQuotationSubject #inheritedira #ira #probate #purefinancial #reducetax #reducetaxesinestateplan #requiredminimumdistribution #trust #Will #YourMoneyYourWealth #InheritedIRA #401k #AlanClopine #beneficiary #estateplan #estateplanningmistakes #FinancialPlanning #individualretirementaccount #InheritanceQuotationSubject #inheritedira #ira #probate #purefinancial #reducetax #reducetaxesinestateplan #requiredminimumdistribution #trust #Will #YourMoneyYourWealth