Don't leave your IRA to the IRS

Author

Edward Jones - Chad Choate, AAMS

For more information about the author, click to view their website: Edward Jones

Posted on

Oct 18, 2023

Book/Edition

Florida - Sarasota, Bradenton & Charlotte Counties

Share This

If you’ve invested in an IRA for many decades, it may well turn into a key source of income for your retirement. Still, you might not deplete your IRA in your lifetime, especially if you also have a pension or a 401(k) and other investment income. So, if your IRA still has sizable assets after your passing, it would likely end up in your estate plan. If you leave your IRA to grown children or other family members, could they be hit with a big tax bill?

Here’s a little background: Up until the Secure Act of 2019, those who inherited traditional IRAs could extend their required withdrawals over their lifetimes, which stretched out the annual taxes due on these withdrawals. But the Secure Act changed the provisions for non-spouse beneficiaries who inherited an IRA after 2019, meaning that beneficiaries of inherited IRAs had only 10 years (beginning the year after death) to withdraw the entire balance. For some beneficiaries, this could potentially create a tax burden. (Inheritors of Roth IRAs are also required to follow the 10-year distribution rule but are not subject to income taxes on account earnings if the Roth IRA’s five-year holding period has been met).

However, not all beneficiaries were affected by the new rules. Spouses can stretch their inherited IRA distributions over their lifetimes and exceptions exist for certain non-spouse beneficiaries. Minor children of the IRA owner (until the age of majority), chronically ill or disabled individuals, and beneficiaries who are no more than 10 years younger than the IRA owner may opt to stretch their distributions.

The new 10-year requirement applies to IRAs inherited on or after

Jan. 1, 2020. But due to confusion over changes to required minimum distribution (RMD) rules for some beneficiaries of inherited IRAs, the IRS waived penalties for individuals who failed to take RMDs in 2021 and 2022 and extended the RMD penalty waiver for 2023.

Although these rulings give beneficiaries — those not eligible for the exemptions listed above — more time to plan, they will eventually need to start taking RMDs, which could affect their tax situations. To help protect your heirs, consider these suggestions:  

Using permanent life insurance. A properly structured permanent life insurance policy could help you replace the assets your family might lose to the taxes resulting from an inherited IRA. You might even consider naming a charity as the beneficiary of an IRA, rather than your family members. The charity would receive the IRA proceeds tax free, and the life insurance could then provide tax-free benefits to your heirs.

Leaving taxable investment accounts to your heirs. Apart from your tax-deferred IRA, you may own other, fully taxable accounts containing investments such as stocks or bonds. Typically, these investments receive what’s known as a “step-up” in their cost basis once they are inherited. This means your heirs will essentially inherit all the gains your investments earned by the time of your passing — but they won’t be taxed on these gains if they sell the assets immediately. This type of sale could help offset the taxes your heirs will incur from the inherited IRA.

The tax and investment issues surrounding inherited IRAs can be complex, so consult with your tax and financial advisors before making any moves. And, as with many areas relating to inheritances, the sooner you start planning, the better.

Chad Choate III, AAMS

828 3rd Avenue West

Bradenton, FL  34205

941-462-2445

chad.choate@edwardjones.com

 

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

 

Edward Jones, Member SIPC

Other Articles You May Like

Spring Cleaning Tips for Seniors

Spring Cleaning ChecklistThe weather is starting to turn, and it's time to indulge in the annual spring-cleaning ritual. Its extra important for seniors to conduct spring cleaning checklists and let go of items that pose potential threats. So, clean out your garage, straighten up your parents' home and prepare your living area for the season ahead! Take a look at BrightStar Cares guide to tidying up as the seasons change. Dispose of Harmful Items First things firstget rid of any items that may be harmful. We often overlook things that have been in our homes for a while and dont realize they may become dangerous as time goes on. Here are nine things, according to AARP (Opens in a new window), that you should get rid of during this years spring cleaning: Hazardous WasteAerosol cans, batteries, motor oil, antifreeze and paint all need to be properly disposed of so they dont contaminate the environment or accidently harm elderly folks, children or pets. Exposure to these substances and other household chemicals (Opens in a new window) can lead to headaches, allergic reactions and, in severe cases, respiratory illnesses. Go to Earth911.com to find a safe place for disposal. Piled-Up Plastic ContainersDo you have piles of plastic containers sitting around just in case? Take a closer look at that plastic. Containers with recycle codes 3 or 7 may contain BPA, a hormone-disrupting chemical that leaches into food as containers age or heat up in the microwave or dishwasher. Replace containers made before 2010 with new plastic or glass ones, that dont contain BPA.Expired or Unused MedicationsWith age, there often comes a greater reliance on medication. But what happens when you no longer need certain medicines? Too often, people let expired medication gather dust. Instead, toss old drugs in an eco-friendly way. Dont flush them down the toilet or put them in the trash. Take them to official collection sites on National Take-Back Initiative Day, April 27. If you keep expired medications around, you risk someone accidentally taking the wrong drug. Old SpicesDried-up, decades-old spices wont make you sick, but they wont add flavor or nutrients to your food, either. According to experts at McCormick (Opens in a new window), seasoning blends last one or two years. Herbs and ground spices are good for one to three years, and whole spices last up to four years. Saving these age-old spices only adds to the clutter in your loved ones home. Moldy MakeupMakeup is only safe for a limited time. After that, infection-causing bacteria can start to grow, especially in eye makeup. Mascara only lasts two to three months, lip gloss six months and foundation six months to a year.Crusty Contact Lens CasesDid you know that 92% of contact lens cases are contaminated due to poor hygiene and lack of cleaning? Eye experts (Opens in a new window) say cases should be cleaned with a fresh soaking solution and dried every day. After three months of use, its time for a replacement.Old PillowsPillows older than 18 months contain fungi, dead skin and dust mites that can aggravate allergies, asthma and sinusitis. Try folding your pillow in half and squeezing out the air. If it doesnt spring back, its too old. Beyond allergies and asthma, the Sleep Foundation (Opens in a new window) asserts that old pillows also contribute to sore musclesa big concern for many elderly folks. Expired Canned FoodCanned food certainly last longer than produce, but these goods will expire after a while. Be sure to read the labels on canned products to learn how long it will keep for. Canned tomatoes and fruits are good for 18 months, while canned meat and vegetables last up to five years. Throw old, expired food awayif its expired, it shouldnt be eaten or donated. Germy Kitchen SpongesAccording to a study done by the Agricultural Research Service (Opens in a new window), microwaving your sponge can kill 99.9 percent of germs. These cleaning implements are rife with bacteria thriving in the damp crevices. Some of these bacteria are linked to severe gut and skin infections. To reduce the bad stuff, microwave your sponge daily in an inch of water for a minute on high heat.Spring Cleaning Tips for Older AdultsOnce your loved ones home is free from any harmful materials, its time to get started on the rest of your spring-cleaning list. Here are just a few more tips for making the most of the season: Cleaning Up for Fall SafetyAround 36 million falls (Opens in a new window) are reported each year, and thats only counting those among older adults. With such a staggering number, its clear that falls are not just passing dangerstheyre a public health concern. This years spring cleaning is a perfect time to evaluate your loved ones home safety and focus on fall prevention. As you help them tidy up, consider the following tips for a safer living space (Opens in a new window): Clear walkwaysRemove any boxes and cords from walkways. Even if theyre easy to avoid for you, they could be a tripping hazard for seniors. Tidy up high-traffic areasConsider moving pieces of furniture like coffee tables and ottomans from high-traffic areas. Try putting side tables right beside furniture instead of obstructing walkways. Examine the floorsHave you noticed loose floorboards or rugs? Repair any damaged flooring or carpeting as soon as possible and use double-faced tape to fasten loose rugs to the floor. Invest in non-slip matsPlace non-slip mats in areas prone to getting wetoutside the bathtub, in front of the kitchen sink and in entryways. Checking Safety Equipment Heres another thing to add to your spring-cleaning checklistfire safety. Its a good idea to check smoke alarms and fire extinguishers regularly, and you might as well lump this task in with spring cleaning. Ensuring your loved ones home is fire-safe will give you added peace of mind. Try these tips from the U.S. Fire Administration (Opens in a new window): Install a smoke alarm inside and outside each sleeping areaReplace smoke alarms that are older than 10 years Ensure carbon monoxide alarms work and are less than seven years oldCheck all electrical cords and replace those in poor condition Make sure outlets do not feel warm to the touch Develop a fire escape plan that identifies an outside meeting place Clearing ClutterYoure armed with lots of spring-cleaning tips, but maybe you dont quite know where to start. Its understandable tidying up an entire home is overwhelming, especially when youre doing so on behalf of a loved one. If youre feeling stressed, implement these strategies while spring cleaning (Opens in a new window) for a senior loved one: Start small: Try not to think of spring cleaning as one giant project. Instead of resolving to clean the whole house today, start with a drawer, cupboard or closet and go from there. Create three piles: As you sift through your loved ones things, place them into one of three pileskeep, donate and toss. Organizing items this way avoids one big, overwhelming pile of stuff youll have to sort out later. Downsize: Consider using this time to downsize. For every new item your loved one adds to their home, ask them to choose something to throw out. Encourage them to donate unused items in good condition and get rid of trash right away. Manage your time: Spring cleaning can last more than one day. If youre on a time crunch, dedicate just a few hours over the weekend to clean. Dont feel like you have to do everything at once spread the responsibility over several days. Ask a professional: You dont have to do it alone! Look into professional organizers in your area and ask them for help decluttering your loved ones home.  Call 24/7 BrightStar Care today to learn more 303-300-6666.

Brighter Tomorrows: Alzheimers Care and Senior Resilience

Seniors with Alzheimers disease set out on a path fraught with uncertainties and difficulties. But this trip also reveals a tremendous potential for resilience, a trait that allows them to overcome hardship, endure, and find hope. Alzheimers care encourages seniors resilience, enabling them to face each day with bravery and tenacity. This blog post will discuss how, despite the challenges of the illness, Alzheimers care increases elders resilience and opens doors to better futures. Comprehending Alzheimers and ResilienceAlzheimers disease is a neurological condition that worsens over time and affects memory, thinking, and day-to-day functioning. Seniors with Alzheimers disease face new challenges every day as they adjust to changes in their abilities and perspectives on the world. In this context, resilience is defined as the capacity to overcome obstacles presented by the illness, adjust to changing circumstances, and recover from setbacks while maintaining ones well-being and sense of purpose. Empowering Through Supportive CareBy offering individualized support and encouragement, Alzheimers care professionals significantly contribute to the development of seniors resilience. By providing empathetic support with everyday tasks, handling medication, and creating customized care plans, caregivers enable elderly individuals to preserve their sense of autonomy and independence. Alzheimers care builds resilience in elders by providing a supportive environment where they feel appreciated and cherished. Encouraging Mental HealthSeniors living with Alzheimers disease may experience a variety of feelings, such as worry, despair, and frustration. The goal of Alzheimers care is to support emotional health by listening with compassion, validating emotions, and creating a supportive environment. Seniors who receive care are able to handle lifes emotional ups and downs with fortitude and grace because caregivers are kind and understanding. Encouraging Meaningful EngagementSeniors resilience to Alzheimers disease is enhanced when they participate in activities that make them happy and fulfilled. With specially designed activities that improve cognitive function, inspire creativity, and strengthen social bonds, Alzheimers care encourages meaningful engagement. Through activities such as music therapy, art therapy, or memory exercises, caregivers provide seniors with the chance to live fully and purposefully in every moment. Developing Relationships and Support NetworksSeniors resilience in the face of Alzheimers disease depends on their ability to maintain social networks and support networks. Alzheimers care makes socialization opportunities easier, whether they involve group activities, outings, or visits with loved ones. In addition to being companions and advocates, caregivers foster relationships that offer support, strength, and a sense of communityall essential components of resilience during trying times. Honoring Milestones and AchievementsDespite the difficulties associated with Alzheimers, each milestone and accomplishment deserve to be honored. Alzheimers care promotes a sense of pride and self-worth in seniors by recognizing and appreciating their accomplishments, no matter how minor. Caregivers strengthen the resilience of seniors by acknowledging and validating their strengths and contributions, which gives them the confidence and resolve to tackle every day.Its important to acknowledge the incredible resiliency of seniors impacted by Alzheimers disease. Loved ones and Alzheimers care can foster this resilience and give seniors the strength, fortitude, and hope they need to confront the intricacies of Alzheimers disease. If you or an aging loved one are considering Alzheimers and Dementia Care in Aurora, CO please contact the caring staff at Talem Home Care & Placement Services today. Call (720) 789-8529At Talem Home Care of Broomfield, we provide passionate, understanding, and flexible caregivers in Broomfield, Arvada, Aurora, Boulder, Brighton, Commerce City, Denver, Erie, Firestone, Lafayette, Lakewood, Longmont, Louisville, Northglenn, Sherrelwood, Thornton, Welby, Westminster, Wheat Ridge and surrounding areas in Colorado.

Concierge Medicine - The Luxury of Time and Access

Utilizing the services of an NCH concierge physician provides you with the luxuries of access and time. While all NCH physicians provide excellent medical care, concierge doctors are able to focus their services on a much smaller number of patients and take a deeper approach to their health.Your concierge physician becomes, in effect, the quarterback of your healthcare team, and patients can reach the doctor on short notice in a way that is not possible in the traditional medical model. Concierge physicians offer their patients personalized care and direct access. In most cases patients are able to get in for an appointment the same day or next day. Additionally, if a patient has a healthcare issue or crisis, they have someone they can call. Patients who would like to see a concierge physician are charged an annual membership fee. This financial model allows the physician to focus their attention on a much smaller number of patients. Usually, the physician limits their patient load to about 300 patients per physician, versus 2,500 to 3,500 in traditional medicine.The concierge model has proven popular in affluent Southwest Florida. Many NCH Concierge Medicine physicians have reached their practices maximum patient count and prospective members are added to a waitlist.The newest addition to the Concierge Medicine team, Tameca Bakker, MD is currently accepting new patients. Tameca Bakker, MD also holds an MBA. Dr. Bakker works primarily at the Moorings Park Community location(s) in downtown Naples.Dr. Bakker previously practiced as a hospitalist and is board-certified in internal medicine. She said she finds concierge medicine to be rewarding for the physician as well as the patient.The reason I went into concierge medicine was to have a better physician/patient relationship, said Dr. Bakker. Concierge medicine allows for ample time spent with patients to listen to their concerns, perform a thorough examination, diagnose and formulate and manage a plan of care with time for questions at the end of the visit. Its a better way of practicing, taking medicine back to what it used to be. I give my personal cellphone to patients. I do courtesy hospital visits and even home visits I take care of my patients. Even if youre traveling, you can reach me from anywhere, and I can call a prescription in.As the quarterback of her patients medical team, Dr. Bakker coordinates with specialists including cardiology, neurology, gastroenterology and others, and sets up labs, imaging, and ancillary care as needed. And like all NCH concierge physicians, she has additional concierge doctors backing her up as part of the team, so her patients always have a doctor to connect with.NCH concierge physicians emphasize preventative care with nutrition and fitness counseling, treating the whole person rather than just a particular symptom or illness.I take a holistic approach, treating the patient as a whole; incorporating mind, body and soul as I care for my patients, said Dr. Bakker.Participation in NCH concierge medicine includes complimentary and discounted membership in the NCH Wellness Center, and personalized coordination of care for patients in NCH hospitals. Patients at the three Moorings Park locations also enjoy access to the spa and the gym at Moorings Park, plus the services of their personal trainers and physical therapists.Sickness doesnt happen on a 9 to 5 basis, said Dr. Bakker. Having the peace of mind that they can connect to their doctor at any time is very reassuring to patients.To learn more about the program, and schedule a meeting with Dr. Bakker, call NCH Concierge Medicine at 239-624-1120Tameca Bakker, MDNCH Medical Group | 132 Moorings Park Drive, Naples, FL 34105239.624.1120 https://nchmd.org/services/concierge-medicine/

Local Services By This Author

Edward Jones - Chad Choate, AAMS

Financial Advisor 828 3rd Ave. W., Bradenton, Florida, 34205

Hello, I'm Chad Choate a dedicated financial advisor in Bradenton, FL, I began my career with Edward Jones in 2017. As a financial advisor, I want to find out what's important to you and help you build personalized strategies to achieve your goals. As a lifelong Manatee County resident, I graduated from the University of South Florida and was a teacher in Manatee County before joining Edward Jones. My driving force is to change people's lives in a positive way, and what better place than my home to do that. Whether you're planning for retirement, saving for college for children or grandchildren or just trying to protect the financial future of the ones you care for the most, we can work together to develop specific strategies to help you achieve your goals. We will also monitor your progress to help make sure you stay on track or determine if any adjustments need to be made. Throughout it all, we're dedicated to providing you with top-notch client service. But we're not alone. Thousands of people and advanced technology support from our office can help ensure you receive the most current and comprehensive guidance. In addition, we welcome the opportunity to work with your attorney, accountant and other trusted professionals to deliver a comprehensive strategy that leverages everyone's expertise. Working together, we can help you develop a complete, tailored strategy to help you achieve your financial goals. I currently volunteer with the Manatee Hurricane football Broadcast and Booster Club, serve on my church's trustees council and have previously served as a leader in Young Life. I am a member of the Manatee Chamber of Commerce and an alumnus of their Leadership Manatee program. I have been married to my childhood sweetheart, Ashley, for 15 years and we have a son, Wesley, and daughter, Camryn. We enjoy watching our children play their sports and traveling as a family.