A Method To Help Families Minimize Taxes on IRAs

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  • Опубликовано: 20 окт 2024

Комментарии • 258

  • @warrenbarnes9653
    @warrenbarnes9653 2 года назад +38

    The problem is that almost nobody has “four responsible adult children”.

  • @bamalam9622
    @bamalam9622 2 года назад +89

    I've watched a lot of your videos over the last couple of years, Paul, and they are uniformly excellent. The content of this one is is really top notch. Thanks for the great value you provide to your viewers.

    • @americasestateplanninglawy1946
      @americasestateplanninglawy1946  2 года назад +2

      Wow, thanks

    • @zblgran944
      @zblgran944 2 года назад +3

      One of the very best you’ve taught

    • @ludytamondong2140
      @ludytamondong2140 2 года назад

      Can i have a contact phone #? I am 85 y.0. Abd i need to talk to someone about estate planning​@@americasestateplanninglawy1946

  • @janebishop5885
    @janebishop5885 2 года назад +41

    Paul, as someone who is familiar with the twists and turns of retirement rules, this is an outstanding summation! I was not aware of the nine month disclaimer, thank you. Two things I would add: 1) owner should evaluate personal tax consequences with that of heirs and move funds under her own tax rate which might be lower 2) owner should advise heirs to take annual distributions and use that as salary while maximizing every dollar in their own 401 and IRA since, at one time a few years ago, the rules changed and allowed worker to select to put 100 percent of salary into 401 as long as the annual cap was not exceeded. Then cap out IRA as well. All of that assumes the heirs retirement accounts were not being maxed before the inheritance as is the case with my heirs....let me add that this change in distribution retirement rules in the Secures act is just another policy shift that hurts the little guys most and impedes lower to middle classes from building wealth. I just hope my life gives me enough time to reduce consequences for my heirs. .... retirement rules are too convoluted and shows the corruption of our leaders.

  • @rosskline
    @rosskline 2 года назад +15

    For advisors who see the bigger picture (like myself), advising the spouse to disclaim part of the IRA for the kid's benefit and then explaining why to the kids... gives you a really good chance of earning the kid's business! You do well by doing what's right.

    • @kingtutt61
      @kingtutt61 2 года назад +2

      Ross…You’re absolutely correct. Too bad people line their pockets with small change where if you just do the right thing, people will see you’re honesty and you will acquire a larger following.

  • @jimf710
    @jimf710 2 года назад +22

    I was planning to use the same strategy for my TSP (401k) account. While I don't HAVE to take distributions until 72, I'll take some out between 60-72 up to the point of the next marginal tax bracket. I'll pay the lowest possible in taxes and then I can invest it in something similar. Moving it from pre-tax bucket to post tax bucket. Don't want to waste the space in my lower bracket. Playing with my spreadsheet made me see while I love to hold on and not spend, doing that will make me have huge payouts in my later years. Why 'starve' myself when I'm younger and have good health. Merry Christmas everyone.

    • @souyang1
      @souyang1 2 года назад +3

      That's exactly what I have planned as well. I also give kids $6k to their Roth IRA account each year as gift. They can invest as they wish. By the time they are 59.5 year old, they can withdrawal from the Roth IRA without paying taxes.

    • @jimf710
      @jimf710 2 года назад +2

      @@souyang1 I'd like to hang out with you. I've also been funding my teenager's Roth for a couple of years. I'll be long gone but by the time they're 60, they should be in great shape.

    • @tomgrimmer947
      @tomgrimmer947 2 года назад +6

      You might want to consider rolling over the withdrawals from age 60-72 to a Roth IRA as your post tax bucket. Everything grows tax free and no RMD required.

    • @jimf710
      @jimf710 2 года назад +2

      @@tomgrimmer947 Thanks for the thought. I was already maxing out my Roth.

    • @larryjones9773
      @larryjones9773 2 года назад

      @@jimf710 There are limits on Roth contributions, but there is no $ limit or age limit on Roth conversions (moving money from a 401K/IRA to a Roth IRA).

  • @alrocky
    @alrocky 4 месяца назад +1

    Informative clear explanation in 19 minutes in 1 take no editing!

  • @gilz2253
    @gilz2253 2 года назад +11

    Excellent and very timely presentation Paul. I've sent a copy of it to my wife for her to watch and then we'll discuss the path forward. FYI my estate attorney has never mentioned this to us. Thanks again.

  • @ricfax
    @ricfax 2 года назад +13

    As a financial adviser, I absolutely agree that there's an inherent conflict of interest that will test the integrity of the widow's adviser that many will sadly fail. An adviser who is knowledgeable and takes their fiduciary responsibility to put clients' interests ahead of their own seriously should not hesitate to explain this. But I fear many won't and many advisers, also, do not have licences that require them to put the interests of clients ahead of their own. Their licenses are basically to peddle financial products and investments that are merely "suitable" which is a far lower ethical requirement than having a fiduciary responsibility.
    Bottom line: Be informed; have family discussions; and don't leave this up to others because they are too frequently uninformed or unprincipled (even if you regard them as a family friend).

  • @jeffeng3945
    @jeffeng3945 2 года назад +11

    Paul, thank you so much for this video with such valuable information that I was never made aware of. This is one of your very best. You explained and illustrated everything as clear and thorough as always. Take care.

  • @carloscorletto4416
    @carloscorletto4416 2 года назад +3

    I really enjoy all your very informative videos, you are absolutely making all the confusing estate planning events a whole lot more understandable. There’s so much to learn, I am amazed at how you are able to to keep it all organized and explain it in a simple fashion to all of us that are not as gifted as you are.
    OUTSTANDING WORK.. thank you.

  • @allisonmanxr2002
    @allisonmanxr2002 2 года назад +5

    Hi Paul. I have been a long time subscriber and wanted to express my appreciation for all the valuable content! I watch each time you provide new content. Thank you so much! Your information is very educational and informative. This is my first comment and am doing so to wish you and your family Happy Holidays! Rod from Myrtle Beach, SC

  • @amerlin388
    @amerlin388 2 года назад +5

    Excellent coverage of topic. My wife and I each have sizable IRA's and earlier this year we set up beneficiary 40/40/20 split between our two sons and the surviving spouse, though I'm thinking of reducing sons' percentage on my IRA - the larger one because it still might push sons into an uncomfortable tax bracket. Of course it's worth reminding people they can still take IRA distribution and/or convert to Roth during years to max out a lower tax bracket - especially after start of retirement and before starting Social Security. Also, free to gift up to $15,000 to each child (or anyone else) each year.

    • @donf18
      @donf18 2 года назад

      I think it's $16k/yr now

  • @Jeff-gd8ev
    @Jeff-gd8ev 2 года назад +3

    I take issue with a lot of financial videos on RUclips, as so many are either misleading or give incomplete information. This one was excellent.
    How about this as a modification to the recommendations in the video: start to convert money from Traditional IRA to Roth IRA, as much as you can afford while still living. Then set the primary beneficiary of the Traditional IRA to your kids, and the primary beneficiary of the Roth IRA to your spouse. The spouse thus gets the money he/she needs to live on, but it's tax free forever, and the kids receive taxable money that they can liquidate over 10 years.

  • @barbjacobson336
    @barbjacobson336 2 года назад +3

    THANK YOU SO VERY MUCH for your informative videos. After learning about the potential for disclaiming an inherited IRA I spoke for our mutual fund estate group and learned how very simple it is to accomplish this! Nine months from the date of death to disclaim. Spouse send simple statement to the mutual fund company. Account can then be transferred to the contingent beneficiary/beneficiaries. More complicated if contingent beneficiary is not named.

  • @robertheim352
    @robertheim352 2 года назад +3

    Thank You. Your point about inherited money benefitting the heirs is the primary goal in my mind. I call it investing in my children. I take more IRA distribution now (at age 68) such that I can gift money to my responsible children; reducing their money worries in mid life. I encourage them to make investments so that they can be comfortable in their retirement.
    Your presentations are very good, and thought provoking!

  • @gailgreif4417
    @gailgreif4417 2 года назад +1

    Thank you sir. This video is extremely relevant to our family. I had to watch it twice to “get it”, but what valuable advice. Literally - valuable. Thank you for the service you are providing to those of us untrained in these matters! You rock!

  • @mommaoinnh2674
    @mommaoinnh2674 2 года назад +5

    Christine should buy a vacation home between where all 4 children live, and help pay airfare to see her kids multiple times a year. It’s crazy to put it all in accounts. Enjoy that money, enjoy your family, and have a vacation home that is gaining value. It’s not all about Money!

  • @rdspam
    @rdspam День назад

    Very informative, and a lot to think about. As the two of us each has plenty to live on, I’m going to seriously look at adjustment to our beneficiaries.

  • @rhymereason3449
    @rhymereason3449 Год назад +2

    Excellent discussion! Thanks so much for freely sharing your knowledge 😊

  • @donreinholz8121
    @donreinholz8121 2 года назад +1

    Great video. This is why having too much money without spreading it out can really hurt your kids since the law changed to 10 years before having to start withdrawals can really penalize you with the highest tax rate.

  • @philipdamask2279
    @philipdamask2279 Год назад +1

    I made the 3 children the beneficiaries of one of my IRAs because my wife has her own IRA and will still get another one of my IRAs.

  • @KordTaylor
    @KordTaylor 2 года назад +2

    I’ve been binge watching your videos over the Christmas break as my wife and I are trying to sort our estate stuff for our son. Thank you so much as they are a great help. For this specific video you might try also having a shorter edit with some business graphics as your user stories might benefit? But again thank you so much. 👏🏻

  • @davidseibert5268
    @davidseibert5268 2 года назад +4

    One of the best estate planning videos I’ve ever seen. Thank you so much. Your message is very applicable for so many people.

  • @brianharbour8833
    @brianharbour8833 2 года назад +10

    Mom passed away in 2019 with a large traditional ira. Dad was alive. We decided to make my brother and sister and me beneficiaries of mom’s ira. Dad does didn’t need it. Our inherited iras from mom are under the old rules. Dad died in 2021 with a traditional ira. Me, my brother and sister inherited dad’s ira. I was thinking of waiting until the 10 years before taking anything out. Maybe we should take out in 10 payments. Mom and dad both had large taxable brokerage accounts. We got all this money with a stepped up cost basis. No taxes. All this makes me think you shouldn’t put money in traditional ira. It’s full of traps.

    • @mikem6796
      @mikem6796 6 месяцев назад +1

      How did you not pay taxes on it?

    • @spudmcdougal369
      @spudmcdougal369 5 месяцев назад +1

      @@mikem6796When you inherit a non Tex sheltered brokerage account, the basis is stepped up to the value at the time of death.

  • @M22Research
    @M22Research 2 года назад +12

    This is excellent, forward-thinking advice, clearly explained. One wonders whether even 5% of the families who fall in this situation even consider such a smart strategy?

    • @M22Research
      @M22Research 2 года назад +2

      @RabaIais Estate PIanning LLC° I’m not clear on the meaning of this response? (The question in my comment was rhetorical - as in - this is excellent advice where likely very few families even realize what they do not know and what they are missing!). Thanks again. I have shared your video with multiple friends.

    • @americasestateplanninglawy1946
      @americasestateplanninglawy1946  2 года назад +2

      Looks like I was hacked by someone who put an asterisk after LLC. I have reported it. Thanks for sharing my video BB.

    • @M22Research
      @M22Research 2 года назад

      @@americasestateplanninglawy1946 aha, got it. Thanks.

    • @llw2226
      @llw2226 2 года назад

      Oh my goodness 🤯

  • @oceanwaves3139
    @oceanwaves3139 2 года назад +1

    thanks for all your videos; i wish you practice in my state; i would be the first one when you open the door. To me, you are honest and someone i would feel comfortable entrusting with my estate planning

  • @eddieadams4770
    @eddieadams4770 2 года назад +1

    Paul, geat videos. Really like them.
    On your two hypothetical where you have the deceased husband's 2m IRA rollover into the Wife's 600k IRA on death and then the whole 2.6 million passes to the 4 children v. wife disclaiming 80% of husband's--don't you start comparing apples to oranges because you have the kids taking annual withdrawals in the lower tax bracket whereas you didn't have Wife do that. In the first scenario, If you had wife withdraw annually for 15 years and then had the kids withdraw annually for 10 years, I think you'd find it just as tax frugal and much more to the benefit of wife and kids.
    The whole point of having money is enjoying what you can do with it, not just avoiding taxes. For example, let's say wife doesn't need husband's 2m but pulls it out and buys a vacation home for her and the kids in Lake Tahoe, CA. Well, over 15 years that vacation home is going to double or triple in value (compared to 5% return in the IRA) and they can enjoy it and create priceless memories in Lake Tahoe and when mom passes, the kids get a stepped up basis.

  • @bobpadrick7718
    @bobpadrick7718 2 года назад +2

    Excellent, Paul. The one scenario you didn't cover is where Bob and Christine create "The Bob & Christine Family Trust," and then they each name that trust as the primary designated beneficiary of each of their IRA's. But, if I follow your example, that is less desirable because by the time the kids get it, the combined IRA's would be worth ~$5M and each kid would get about ~$1.25M. So even if they take only 10% each year, that's ~$125K, which means they can only make another $23K more for the year before being bumped up into the 24% tax bracket on all of that year's earnings. Did I get that right?

  • @jokedog
    @jokedog 2 года назад +3

    The content of this video and your channel is pure gold. Thank you so much. This is the exact education I needed. You're so correct people always advise you to speak to an accountant or financial advisor but this is beyond their scope of work or duties. Thanks for being the financial friend we need to guide us.

  • @llw2226
    @llw2226 2 года назад +1

    Wow you are top notch!! I’ve never really understood this stuff but you explain things so well!!! Thanks for making these videos sir. 😊

  • @josephroberts7374
    @josephroberts7374 2 года назад +11

    Another option: The wife can keep the deceased husband's money separate from her IRA, in a separate IRA. She can then take withdraws out of this, in larger sums, and then distribute the money to the children if she wants. She is likely in a lower tax bracket than the kids, since she is retired- further saving more money in taxes. When she dies, it will then transfer to the kids, and they can take out 1/10th per year, over 10 years. This allows the wife to keep full control over the money, in case things change and she later needs it, and it lowers the tax bill on everyone. It also delays the 10 year clock, since that does not start when it is inherited by the spouse, but it would start 15 years later, in this scenario, when the kids inherit it from mom. Thus giving a total of 25 years to take withdraw the money, instead of only 10 years.

    • @suzanneemerson9787
      @suzanneemerson9787 2 года назад

      @joseph roberts I laughed when I read that because she’s retired she’s probably in a lower tax bracket. I’m retired, and having to take the annual RMD from my IRA account and add it to my pension to determine my taxable income. I saved the max and invested it well. Now I’m in the very highest tax bracket. That never happened in my entire working life. My pension is half what my salary was, but I’m paying nearly 40% Federal tax on it. Plus California.

    • @parler8698
      @parler8698 7 месяцев назад

      Excellent idea.

  • @bmiles1232
    @bmiles1232 2 года назад +1

    Another very good presentation. This works out best when there is a 10 yr separation between the death of the married couple. Of course the surviving spouse needs to feel comfortable with giving up the bulk of Bob's IRA. If the kids are smart and disciplined, they will draw the inherited IRA over the 10 yr with tax consequences in mind. I am designating our trust as the beneficiary. That way the assets can be divided up in the trust with charity drawing from the high tax IRA, the kids drawing a combination of IRA, after tax assets, and finally Roth IRA.

  • @quyd72
    @quyd72 2 года назад +1

    Awesome. Thank you for the best topics.

  • @beckylane1588
    @beckylane1588 2 года назад

    Wow, what a variety of comments. Thank you for being "thick-skinned" enough to persevere through it all👍

  • @carolwilliams2356
    @carolwilliams2356 2 года назад +1

    Whew. I am exhausted. Now if someone will just leave the IRA to me. Very good video.

  • @SaltWaterSalmon
    @SaltWaterSalmon 2 года назад +2

    I just watched "scenario 1" from this video happen to my GF's father's estate! We had the help of 2 CPA's, an attorney versed in estate planning and (to a very limited extent) a fiduciary financial planner...NOBODY said boo about the smarter "scenario 2" referred to in this video. What a shame!

  • @lnbt1
    @lnbt1 2 года назад +1

    Thumb up! I subscribed!!! Very informative and Thank you so much! Can you also please make the video about Roth IRA with the same situation? I understand that Roth IRA is non-tax. But how long spouse / children (inherited) can keep the account and any recommendation ? -Thank you so much!

  • @NeedsMoreToys
    @NeedsMoreToys 2 года назад +9

    Interesting. Though I wonder which method results in the most net income after tax. Tax free growth on the principle for 10 years is significant. But so is 39% tax. Regardless this is worth considering.

    • @darkstar7742
      @darkstar7742 2 года назад +1

      $2 million at 5% growth in 10 years may be with $3.2 million!!

  • @muhammadlimon1369
    @muhammadlimon1369 2 года назад +1

    It was amazing. I like this type of content thank you

  • @moneymusicmindset
    @moneymusicmindset 2 года назад +1

    Generational wealth planning is going to be the planning model of the future I believe. People will need the wealth of a family unit to survive - going alone in the future will be more and more difficult based on our current trajectory.

  • @leonardmark8201
    @leonardmark8201 2 года назад +1

    Excellent, clearly explained analysis.

  • @tryan7
    @tryan7 2 года назад +1

    Mr. Paul, Your information is top notch. You present the facts without any emotion. I like that. I'm from the Midwest, Chicago area. I know there are slight differences from one state to the next. Does this information apply to the entire U.S.A.? Anything else I should know regarding this subject. Thank you in advance.

  • @Harry_16710
    @Harry_16710 2 года назад +4

    Brilliant - so much useful information; I hadn't heard of disclaiming an inherited IRA! Thanks for sharing your knowledge, Paul. 👍🏼

    • @americasestateplanninglawy1946
      @americasestateplanninglawy1946  2 года назад +2

      Wonderful!

    • @tomgrimmer947
      @tomgrimmer947 2 года назад +1

      Actually not really disclaiming an "inherited" IRA; it's a "spousal rollover IRA" which is different than an inherited IRA

  • @LadyCatherine538
    @LadyCatherine538 2 года назад +1

    Time well spent. Thank you.

  • @avinashagarwal6276
    @avinashagarwal6276 2 года назад

    Many thanks for this wonderful video! Extremely informative!

  • @SophiaCVeng
    @SophiaCVeng Год назад

    Thank you for valuable info.🙏❤️I shared and liked👍

  • @dalebulgrin2702
    @dalebulgrin2702 2 года назад +2

    What about the taxes paid each of the 10 years, on the now taxable investments each child took? The 10% withdrawn each year would then be invested and any gains would be taxable.

  • @mariondiemert430
    @mariondiemert430 2 года назад

    Done. This was mind boggling, but genius. Thank you!

  • @TheBeagle1956
    @TheBeagle1956 2 года назад

    Excellent video! Great information I had never considered before. Keep up the good work!

  • @allent1034
    @allent1034 2 года назад +1

    If I calculated correctly from what you said, after taxes the kids would each get about $871,000 doing the traditional route but only $684,000 if the family followed your advice with disclaiming the inheritance. Nobody should care what the taxes amount to. The only thing that matters is what is left over. If you have more left over by a strategy where you pay more taxes, follow that strategy. The big difference in this story is that the kids get a little bit of money at a time rather than a big chunk when they are near their retirement age. It would depend on the situation for which is better. I think many kids would squander the extra cash away and not have any life improvement to show for it but for some it could be a great thing.
    Thank you for pointing out this option but it is certainly not the best option for everyone or maybe even most.

    • @harryl7946
      @harryl7946 2 года назад +1

      At 60+ years of age, I don’t think they would be referred as ‘kids’.
      Paul did say “responsible adult” children.

  • @lardogw4337
    @lardogw4337 2 года назад

    Excellent advice, another great video. Easy to understand and thank you for going through all the options.

  • @280zone
    @280zone 2 года назад +1

    Thank you so much for putting this together is a very understandable way!

  • @thomasdipaolo2349
    @thomasdipaolo2349 2 года назад +1

    Excellent video. As always. Will definitely share

  • @stevemueller9832
    @stevemueller9832 2 года назад +1

    I’m a new viewer/subscriber, Excellent information and clearly presented. Wondering about disclaiming if the primary beneficiary is a trust can the ira still be disclaimed to children/contingent beneficiaries?

  • @FaylenesWorld
    @FaylenesWorld Год назад

    Excellent content. Thanks for sharing !!

  • @HB-yq8gy
    @HB-yq8gy 2 года назад

    Paul is a smart dude I think our will/ testamentary trust has that spousal disclaim option.

  • @maryricketts7337
    @maryricketts7337 2 года назад

    Anyone who has an IRA that’s large enough to incur hefty taxes needs this information.

  • @prospatacsil1378
    @prospatacsil1378 2 года назад +1

    Very informative . Thank you. Is it better to use the revocable trust as the ira beneficiary?

  • @Punch8721
    @Punch8721 2 года назад

    The IRS is now requiring annual RMD's for inherited IRA's that fall under the 10 year rule. No option to wait until year 10. ROTH IRA's have no RMD but must be drained by year 10. The spouse is exempt from the10 year requirement. Beneficiaries who inherited an IRA prior to 2020 are grandfathered and can use stretch rules.

  • @donf18
    @donf18 2 года назад

    Good and valuable info presented very professionally, thanks Paul

  • @dogmama2many
    @dogmama2many 2 года назад

    Thank for sharing your brains with us!

  • @chanks9315
    @chanks9315 6 месяцев назад

    Thank you Paul! Another very informative video!! I'd already figured out the benefit of Scenario #2 but I'm having problems understanding how to set up beneficiaries for an IRA.
    Rather than naming beneficiaries directly in my IRA, I'd like to create a Conduit Trust within my main Trust as the IRA beneficiary and leave very specific instructions in my trust on how I want the IRA distributed. Can you offer any advice?
    For example:
    The Conduit Trust is named as beneficiary of the IRA
    I want the IRA to be distributed in 10 equal, annual amounts to the Conduit Trust.
    I will have each of my two children and four grandchildren identified as beneficiaries in my Trust each with a specific percentage of assets defined
    I want each of the 6 family members to receive their % of the annual IRA distributions in 12 equal amounts. (monthly)
    Will each beneficiary need a Conduit Trust of their own?
    Will each monthly disbursement have taxes withheld?
    What will be the tax rate of each monthly disbursement?

  • @meltdownman1
    @meltdownman1 Год назад

    More of a tax/Roth IRA question. If my nephews and nieces have a 401k (or 451) and contribute also the full annual amount to an IRA, can I gift them the 15k limit and put $6500 it into another IRA for them or is does the annual limit apply and they cannot contribute to an IRA with me doing it for them? Can I contribute to a ROTH while they contribute to a traditional IRA for a total of $13,000or does the annual contribution limit of $6500 apply for a combined IRA and ROTH accounts? Excellent video. I have subscribed.

  • @catherinebullock9748
    @catherinebullock9748 2 года назад

    Thank you… this is exactly my situation.

  • @Chris.Brisson
    @Chris.Brisson 2 года назад

    I'm taking notes.

  • @kevinfh44
    @kevinfh44 Год назад

    Very informative, thanks for the information

  • @lifesabre
    @lifesabre 2 года назад +1

    Would you recommendation change if the amount of the IRA was significantly higher and the beneficiaries were already making high income salaries on their own? And the number of beneficiaries was less? Understanding you would still want to avoid the ten year lump sum I’m more asking about the distributions. Thanks for the great videos very helpful to all that view.

  • @kaitingle
    @kaitingle 2 года назад +2

    Plz comment on -/what about if we convert the traditional IRA to ROTH gradually, what will be the tax consequences to the children after our passing?

    • @ray7157
      @ray7157 2 года назад +2

      If they inherited a Roth IRA, there is no tax on the distribution but they will still have to take it all out in the 10 years. Since it is a Roth without taxes, I would let it build up tax free inside the Roth and take it out at the end of 10 years rather than take it out annually. As you alluded to if you convert the IRA to the Roth yourself - you would pay the taxes as ordinary income at your tax bracket so it would be good to only convert enough to not put you into the next tax bracket but even if you missed by a little bit, the income tax bracket is progressive so only that amount that goes into the higher bracket is taxed at that rate. But be careful about the increase IRMAA and possible NIIT if you have high income or investment gains!

  • @Imsierrabound
    @Imsierrabound 7 месяцев назад

    If the inherited 401K contains appreciated company stock then the children should consider executing an NUA on the disclaimed amount and pay capital gains tax instead of ordinary income taxes.

  • @auricgoldfinger8478
    @auricgoldfinger8478 2 года назад +2

    The assumption is that the children under the second assumption reinvest the lesser taxed amount. They are forgoing tax free compounding for the ten year time period. The end result is very similar. If they need the money prior to the ten year term this doesn’t apply

    • @ray7157
      @ray7157 2 года назад

      It is not "tax free compounding" it is tax deferred and that is why it is "sometimes" better to take the money out gradually to not go into the next tax bracket rather than take it out all at one time where it most likely will put you into the next or even higher tax bracket.

  • @rxrodrigues
    @rxrodrigues Год назад

    When Christine disclaimed the $2m inheritance, and if Christine also filed IRS Form 706, when Christine dies, would the total estate benefit from a reduction of $2m and still have Bob’s full estate exemption added to hers when calculating estate taxes then?

  • @brendahere
    @brendahere 2 года назад +2

    LOL, MY mom is Christine and my dad IS bob. Maybe I need to pay attention to this.

  • @lifewithmargot
    @lifewithmargot Год назад

    This is why my moms financial advisor doesn’t want her to do a Roth conversion per my suggestion… what can I do?

  • @CC-hr4vr
    @CC-hr4vr 2 года назад

    Great information very insightful

  • @rockyroad7345
    @rockyroad7345 Год назад

    If Christine died at 79, she would've been required to make regulated minimal withdrawals from her IRA starting at age 72, so her balance at her death 7 years later wouldn't have been as large as you stated. Am I missing something?

  • @weizheng673
    @weizheng673 2 года назад +1

    Thus, in general income deferrals is costly in tax. Am I right? In addition to 401k, I also have executive deferral. By delaying income, I will subject to higher tax

  • @vincentlee4799
    @vincentlee4799 2 года назад

    Really interesting topic, of course none of us know the future tax changes by the Congress or Wash Admin. But, interesting - I suspect many spouses will not have any clue what to do and will just have the money flow based on how the decease spouse set things up. At this time in the living spouse life the mental understanding of some of these complex financial decisions may not be possible. Maybe the first spouse should leave written instructions, but obviously tax law can change and there will probably not be anyone that has the understanding to make a revision in the original plan or thinking from the spouse that pass away.

  • @williamtoomey3838
    @williamtoomey3838 2 года назад

    Except that the IRA generally it is not part of the estate and can't be disclaimed. The distributions will be made to the named beneficiaries.

  • @nikkiyifei6856
    @nikkiyifei6856 2 года назад +3

    Thank you so much for sharing this content with your viewers. I liked, subscribed and shared this video. An idea came to me as I was listening to you: have the wife inherit the $2M IRA, take the RMD, gift each adult child and grandchild $15,000 to help them out if they need it, or reinvest the RMD back to an investment account if the adult children don’t need the extra help, then upon her death, set up a trust as the beneficiary of her IRA and the investment account mentioned above, name the 4 children as the beneficiaries of the trust and structure the trust so that each child takes advantage of the 10 year rule for the IRA RMD of her IRA. I wonder if this would work. I’m not a financial planner, but I’m a tax accountant.

  • @marbles05
    @marbles05 2 года назад +2

    Do 401K's work the same?

  • @gcburkett
    @gcburkett 2 года назад

    Never thought of doing this.

  • @harryl7946
    @harryl7946 2 года назад +2

    Now I need to seek out a Trust and Estate lawyer of which also knows tax laws. Maybe an accountant as well! 🤔

  • @ginas9317
    @ginas9317 2 года назад

    Very informational. Thank you

  • @ronbrown9064
    @ronbrown9064 2 года назад +1

    Why no mention of RMD's required to be taken from the IRA, reducing the total value of the IRA's total value over Christine's 15-years?

    • @frankcaputo2571
      @frankcaputo2571 2 года назад

      I guess you have to go another qualifying attorney for that 😂

  • @billsfone
    @billsfone Год назад

    Still confused as to the 5 year rule and the 10 year rule... My Dad passed away this year, had his Trust as the beneficiary of his IRA. We were told by Fidelity after creating Inherited IRAs that we must withdraw all within 5 years??

  • @thomasshreve750
    @thomasshreve750 2 года назад +3

    Aren't traditional IRAs, 401Ks, TSPs, etc inherited by children, grandchildren, or others protected by Federal estate laws, assuming the inheretence is under the estate limit?

    • @Corkfish1
      @Corkfish1 2 года назад

      He's talking about income taxes, not estate taxes.

  • @jdett3863
    @jdett3863 2 года назад

    Great information but cant relate because I dont have a million dollar IRA. Can you provide information regarding federal taxes on much smaller IRA? Does your advice hold true with much lower amounts?

  • @tanvdoan
    @tanvdoan 2 года назад +2

    Knowledge is power. This video is powerful. Thanks

  • @hannaJardin
    @hannaJardin 2 года назад

    Thank you so much for this valuable amd helpful video!

  • @gust9464
    @gust9464 2 года назад

    Excellent video, thank you! This might be a little,of topic, but I had 2 questions, can you only use 25% of your income (1099) & are you allowed to use your IRA to buy a primary residence without any penalties (due to covid situation)?

  • @amerlin388
    @amerlin388 2 года назад +1

    Can the non-spousal inheritance potentially be spread over 11 tax years? Suppose I die July 1, 2051. My two sons inherit large portion of my IRA and can take 1st distribution in second half of 2051. They take further distributions in years 2052-2060. And an 11th final distribution in the first half of 2061? Still within 10 years, right?

  • @RaphaelQuixote
    @RaphaelQuixote 2 года назад

    Hi Paul, a small question in two parts: 1) Assuming the inheriting spouse makes the usual mistake and passes on the entire accumulated 6-million-dollar IRA to her children when she dies, would it still reduce their taxes if they took 10 annual payments from that point on? And (2) What if the entire IRA is only worth 1 million when she dies, and there are three children? In that case would it be better for them to let it grow for as long as possible?

  • @rstrouts
    @rstrouts 2 года назад

    Paul, For a future video, under what circumstances are TOD's/POD's/house, car, etc., beneficiary deeds (in applicable states), etc., preferable to trusts, or not preferable at all?

  • @Timbaland20
    @Timbaland20 2 года назад

    What if you bypass your kids and leave your IRA to your grandkids? I herd that the distributions would be required over their lifetime.

  • @VideoVaultification
    @VideoVaultification 2 года назад

    As interesting as that was, all I could think about was what would be the math had Christine done a roth conversion at the time of transfer and then had 15 years of growth on that before her death. How would that conversion plus 15 years of growth as a tax free roth compared to your recommended scenario.

  • @minhvinhtube
    @minhvinhtube 2 года назад +1

    We're in between 22% vs 24% tax brackets. I have to max out TSP traditional to stay in 22% tax. Should i just pay 24% and contribute 100% to Roth TSP? Thanks

  • @chitownmike5075
    @chitownmike5075 2 года назад +3

    Tell me where I can get 5%, until I get to 79.

  • @K5310
    @K5310 Год назад

    Can this conduit trust you mention be the same trust as the “cash income trust / medicaid trust” ? Or you suggest to set up two separate trusts?

  • @andielliott6371
    @andielliott6371 2 года назад

    Paul, A question about Annuities and nursing care expenses. If the annuity is lifetime for both husband and wife and one of them needs to go into a nursing home, how much of the annuity income will the government require to go towards the nursing home expenses...provided there are no other qualifying assets.

  • @rgarri6396
    @rgarri6396 2 года назад +2

    Great video, but I love to see my kid struggling . Builds character!