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More IRA Mistakes To Avoid
IRA investors and their beneficiaries are seeing lost investment opportunities and tax liabilities in thousands of dollars, perhaps even millions of dollars, due to ignorance as well as administrative snafus.
The top three costly errors are:
- Naming an estate as beneficiary. Unwise because the IRS does not treat an estate as an individual. Hence it has no life expectancy, and (taxable) distributions that could have been postponed, must begin immediately.
- Not knowing distribution rules. It is critical to determine whether to name yourself, a spouse or a non-spouse. The least attractive is naming yourself -- you are able to stretch out distributions (for a non-Roth IRA) only 16 years once you reach age 70 1/2. The best option is to choose a (relatively) very young spouse.
- Trying to use no-load fund families to handle IRAs with multiple beneficiaries. You get what you pay for. No-load fund companies, which do not charge for the IRA services, likely will offer little assistance and have little expertise. Go to an expert to help you manage beneficiaries and distributions.
Source: Financial Planning, March, 2000
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Free Opinion
Sponsored by James J. Eccleston, an attorney representing stockbrokers, financial planners and
investors nationwide in arbitration, litigation and regulatory matters, and a shareholder with the law firm
Shaheen, Novoselsky, Staat, Filipowski & Eccleston
P.C.(www.snsfe-law.com). This Web site contains material
of general interest. It is neither intended to, nor constitutes, either legal advice or investment advice.
Always consult an attorney and/or investment advisor when building and protecting your wealth.
All content Copyright © 2008 Advocate Capital Management, Inc. except where noted. All rights reserved.
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