You have been contributing to your IRA for years. The market is up, and you are watching those investments grow. Maybe you have rolled over funds to your IRA from your company plan. You may now have a significant balance. So far, you have taken smart steps toward a secure future. Don’t stop your careful planning there.
While you have been saving for retirement, you may not have thinking about what happens to your IRA after your death. An IRA is not only an important part of your retirement, it is also a significant part of what you will leave to your heirs. You will want to carefully consider what will happen to your IRA after you die.
Your will does not determine who gets your IRA. Many people believe that their will determines who inherits their IRA. This is a common misconception. Your will has no effect on who will receive your IRA assets because IRAs are generally not part of the probate estate. In other words, IRAs pass to beneficiaries outside the will. Even a perfectly drafted will by an expert attorney will have no control over what happens to your IRA after your death.
Don’t overlook the beneficiary form. The main estate planning document for IRAs is the beneficiary designation form. This form, not a will, will determine who inherits your IRA funds. This is a form that you most likely completed with the IRA custodian when you established your IRA. On a standard beneficiary designation form, an IRA owner names one or more primary beneficiaries. Additionally, the IRA owner usually will also name a contingent beneficiary. Contingent beneficiaries inherit the IRA funds if the primary beneficiaries predecease the IRA owner.
Update your beneficiary form for life events. You may have established your IRA a long time ago. IRAs have been around for decades and a lot has happened! Consider contacting the custodian of your IRA (or checking online) to see if your beneficiary designation form is up-to-date and accurately reflects your intentions. If you have divorced, you will want to be sure your ex-spouse is not still listed on the beneficiary designation form. This does happen and sometimes this oversight ends up in a court battle, as the ex-spouse claims IRA funds that the IRA owner may have wanted to go to a current spouse or to children. Avoid this legal mess by making any needed changes now.
Do regular beneficiary form checkups. Problems can occur when an IRA beneficiary designation form is not clear. Are all the listed beneficiaries on your form clearly identified, along with the share of the IRA to which they are entitled? Spending some time now to be sure that everything on the beneficiary designation form is accurate will avoid significant problems for your heirs in the future. Sometimes, the IRA custodian cannot find a beneficiary designation form. This can happen for a variety of reasons, including bank mergers and takeovers. If you discover this now, the solution is easy: You can simply complete a new beneficiary form. If no beneficiary form can be found after your death, there will be more serious problems as the IRA will be treated as if no beneficiary was named and will be paid out to the default beneficiary listed in your IRA document (usually your estate or spouse).
You have worked hard to build a balance in your IRA. Taking a few simple steps now to be sure that your beneficiary form is completed, up-to-date, and accurate will ensure that those funds are passed safely to your intended heirs.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Specializing in private wealth management, we provide education, guidance, and strategies to help you achieve a tax-efficient retirement income.
Investment advisory services offered through Donato Wealth Management, PLLC, dba Empower Wealth Management and Empower Wealth & Tax (“Empower Wealth Management” or “EWM”),
an SEC registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
The information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional adviser before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned, or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Personal investment advice can only be rendered after the engagement of EWM, execution of required documentation, and receipt of required disclosures. All investment and insurance strategies have the potential for profit or loss. Asset allocation and diversification will not necessarily improve an investor’s returns and cannot eliminate the risk of investment losses. Past performance is no guarantee of future results. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #305031.
Insurance products and tax services are offered through Senior Tax and Insurance Advisors, PLLC, dba Empower Wealth Group (“Empower Wealth Group” or “EWG”). Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not in any way refer to investment advisory products offered through EWM. Rates and guarantees provided by insurance products and annuities are subject to the financial strength of the issuing insurance company; not guaranteed by any bank or the FDIC. EWG is not affiliated with or endorsed by the U.S. Government, Social Security Administration, nor the federal Medicare program. You may be contacted by a licensed insurance agent. Calling the number above will direct you to a licensed insurance agent. EWG may not offer every plan available in your area. Any information provided is limited to plans available in your area. Please contact Medicare.gov or 1-800-MEDICARE.
EWM and EWG are both affiliated companies of Empower Wealth, LLC (“Empower”). Investment adviser representatives of EWM may have a financial incentive to recommend tax and insurance products and/or services offered through EWG which presents a conflict of interest. This conflict is addressed by EWM’s adoption of its Code of Ethics, which requires that all EWM’s Associated Persons place the interest of clients ahead of their own. Clients of EWM are also free to choose their own tax and/or insurance professionals and are under no obligation to utilize the services offered through any related entities or persons associated with Empower.
Strategic Partners listed on this page are not employees of EWM and are not affiliated through common ownership.
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.
© Empower Wealth Management All Rights Reserved.
