The Multi Generation IRA
Significant New Tax Laws Were Enacted in 1999, 2002 and 2006. These new laws benefit you in many ways, and include reducing the Required Minimum Distribution (RMD) payout requirement from your qualified retirement plan. You must begin your RMD no later than age 70½ (excludes Roth IRA's). A lower RMD means there is more money left in your IRA at death. The remaining money can be paid to your beneficiaries over their lifetimes instead of over a limited time period not to exceed five years. Choosing a Multi Generation IRA rather than a lump sum distribution can mean a legacy of lifetime income for your spouse, children, and grandchildren. What Are The Advantages? 1. Reduce your federal income tax. 2. Possibly reduce income tax on your Social Security. 3. A lasting legacy - not a tax burden to your spouse and children. 4. Peace of mind that years of savings will not be depleted by the IRS. Will the IRS be one of the largest beneficiaries of your IRA?
What Can Destroy the Stretch IRA?
Some of the many errors that can destroy the tax benefits of a Multi Generation IRA:
1. You are not familiar with the many complicated rules and deadlines associated with IRA distributions...and are your beneficiaries don't know either.
2. You have not properly filled out a Beneficiary Designation Form for your IRA.
3. You have not made proper use of Contingent beneficiaries and per stirpes designations.
4. Your Custodian has no record of your Beneficiary Designation Form.
5. You named your estate as one of your beneficiaries to your IRA.
6. You named your living trust as one of your beneficiaries to your IRA.
7. Your Custodian requires that your IRA pass to your beneficiaries in 5 years or less.
8. Your Custodian won't stretch your IRA to your beneficiaries over their lifetimes.
9. Your Custodian won't split your IRA into multiple beneficiary accounts at your death.
10. Your Custodian won't allow your IRA to pass to the beneficiaries of your beneficiaries.