First, we should point out the fact that the same tax situation exists for the beneficiaries. Someone who inherits a Roth IRA can take distributions without paying any taxes. A traditional account beneficiary would have to pay taxes on the income. With either type of account, if the beneficiary is someone other than your spouse, they would be required to take possession of all the assets in the account within 10 years of your passing. This is another new twist that is part of the SECURE Act. … [Read more...] about What are the rules for beneficiaries?
In December of 2019, the SECURE Act was passed by Congress and signed into law by the president. It included changes to the individual retirement account guidelines, and one of them applies to this question. Prior to the enactment of this measure, you had to stop contributing assets into a traditional IRA when you were 70.5 years of age. Now, you can continue to make contributions without any age limitations. The same thing is true with Roth IRAs, but this was the case before this new law was … [Read more...] about Are you allowed to keep depositing money into your account as long as you want to?
You can do this for either type of account when you are 59.5 years of age, but there are a handful of different exceptions to this rule. Money can be taken out in a penalty free manner to help you finance a first home purchase, and you can use the funds to pay higher education expenses. If you are unemployed, you can withdraw money from your IRA to pay health insurance premiums during this interim. It is also possible to utilize funds in the account to cover unpaid medical bills. … [Read more...] about When can you start to take money out of your individual retirement account without being penalized?
The meaningful difference can be boiled down to a single word: taxation. Contributions into a traditional IRA are made before you pay taxes on the income. That’s the good news, but the bad news is that you have to pay regular income taxes when you start to take distributions. It works in the reverse fashion with a Roth individual retirement account. Your contributions are made after you pay taxes on the income, so there is no taxation on withdrawals. … [Read more...] about What is the difference between a traditional individual retirement account and a Roth IRA?
You can choose to receive a Social Security benefit when you are as young as 62 years of age. However, you would be accepting a significantly reduced payout every month, so this is something to take into consideration. The age of eligibility for your full benefit depends on the year of your birth. For people born between 1943 and 1954, the age is 66, and it goes up by two months per year after that. So, if you were born in 1955, you would become eligible for your full benefit two months after … [Read more...] about When can you start to receive Social Security?
You could include a document called a pour over will in your estate plan to account for this possibility. If you have assets in your direct personal possession at the time of your death, the pour over will would allow these assets to be absorbed by the trust. … [Read more...] about What happens to assets that I never signed over to the trust?
No, they would not be subject to regular income taxes. The reason why is because you already paid taxes on your income, and you are in essence leaving the remainder to your loved ones. … [Read more...] about Are distributions to my beneficiaries taxed?
You can name a disability trustee when you are setting up the trust. It can be the same individual or entity who would administer the trust after you pass away, or it can be someone else. … [Read more...] about What happens to the trust if I become incapacitated late in my life?
This is entirely up to you. In the trust declaration, you name a successor trustee. It can be someone who you know personally, but many people use a professional fiduciary like a bank or a trust company. The ideal choice will depend upon the circumstances. Your estate planning attorney can help you decide whom to choose. … [Read more...] about Who becomes the trustee after I die?
Yes, you can convey additional property into the trust at any time, and you can change the terms. You can even revoke it completely. … [Read more...] about Can I change the trust after it has been created?