There are so many people spending much of their working life building their retirement savings through the use of investment vehicles like IRA’s. These funds can become a significant part of the income used throughout your retirement years. When it’s time to retire, you will utilize these accounts for a steady and dependable source of income, which will help supplement other sources of income like Social Security or income from Annuities. For the majority of us, this is exactly what we will do.
There are some where IRA’s are a source of potential income that may not be needed. When converting these accounts into income often means a larger tax burden that is not necessary. You can rather pass this power of income with tax-deferral onto your heirs, essentially creating a Legacy of Growth and Income for multiple generations.
For anyone who has an IRA, qualified distributions are required to begin by age 701/2 over the owner’s life expectancy. The owner may always choose to take out more if they need, but they have to take out a minimum based on their life expectancy. If you are fortunate enough to need only the RMD, you may find yourself in the position to leave a significant amount to your heirs. Prior to tax law changes this would mean an additional tax burden on those you care about the most. Before these changes, a complex, and often costly plan was used to pass on the legacy you wanted to leave your beneficiaries. Your beneficiary’s only other option was taking the full distribution spread out over a maximum of five years. This may have caused unwanted tax liability and severely limited the future growth potential of the inheritance.
There is an exciting alternative! The Internal Revenue Service (IRS) has made significant changes to the tax law, making it easier to set up and pass on an IRA to your heirs. They have also defined how the wealth may be distributed once you pass on. Due to the structuring of the payout process, the beneficiaries are allowed to STRETCH” the distributions over their own life expectancy. This will allow them to spread out their tax liability as long as possible, which allows that legacy to continue to grow tax-deferred and provide income for a number of years. This concept is called a Multi-Generational Distribution option, and it can be provided to you and your heirs by Maryland Annuity Resource.