When you lose a loved one, the last thing on your mind is what to do with his or her retirement accounts. But as a beneficiary, you’ll have decisions to make—and the wrong moves could cost you. Watch this week's video for what you should know. Make Lucia Capital Group your first stop on the path to retirement. Watch live shows, view video clips on demand, and read our informative articles to get educated today! Visit for more Subscribe to our channel: Follow Lucia Capital Group on Twitter: Like Lucia Capital Group on Facebook: ...(read more)
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Inheriting an Individual retirement account (IRA) can be a significant financial asset for heirs, but it's essential to understand the nuances of how the inheritance works. The laws governing inherited IRAs can be complex, so it's vital to seek professional guidance from a qualified financial advisor to make the process easier. Here are several important factors to consider when inheriting an IRA: 1. Understanding the Different Types of IRAs There are two types of IRAs: traditional and Roth. Traditional IRAs are tax-deductible contributions, which helps reduce taxes during the saving phase. In contrast, Roth IRAs are funded with after-tax dollars and are tax-free during retirement. Understanding the type of IRA you've inherited will affect how the distribution rules apply to your inheritance. 2. Naming Beneficiaries Always make sure you have a named beneficiary on your IRA account. If no beneficiaries are named, the IRA balance will go through probate and end up in your estate, which can lead to higher taxes and longer probate processes. 3. Required Minimum Distributions (RMDs) As an IRA beneficiary, you must take required minimum distributions (RMDs) from the inherited IRA annually. The amount of the RMD is calculated based on the beneficiary's age and life expectancy. Your financial advisor can help you determine the optimal distribution amount. 4. Timing Distributions Unlike the original IRA owner, the IRA beneficiary does not have the ability to postpone RMDs until age 72. The beneficiary must take RMDs from inherited IRA accounts, starting the year after the IRA owner's death. However, there is some flexibility in terms of timing. The beneficiary can opt to take the full distribution in one year or stretch the distributions over time. 5. Tax Implications Inheriting an IRA can offer valuable tax advantages, but it's essential to understand the potential tax implications. Depending on various factors, such as the IRA owner's age at death, the beneficiary's tax bracket, and the type of IRA inherited, taxes can vary considerably. 6. Trust Planning Consider using a trust to manage your inherited IRA funds for improved asset protection, tax planning, and increased control over the assets. A trust can also offer added flexibility for beneficiaries should they ever decide to change their beneficiaries down the line. Bottom Line When it comes to inheriting an IRA, understanding the rules surrounding distributions, taxes, and beneficiary designations is vital. By working with an experienced and knowledgeable financial advisor, you can simplify the process and maximize the benefits of your inheritance. https://inflationprotection.org/ray-lucia-jr-of-lucia-capital-group-weekly-discusses-the-essentials-of-inheriting-an-ira/?feed_id=98953&_unique_id=6466cc3dddc1a #Inflation #Retirement #GoldIRA #Wealth #Investing #FinancialPlanning #investing #LuciaCapitalGroup #Retirement #WealthEd.com #InheritedIRA #FinancialPlanning #investing #LuciaCapitalGroup #Retirement #WealthEd.com
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