Articles Tagged with retirement

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During your lifetime, your retirement account has asset protection, but as soon as you pass that account to a loved one, that protection evaporates. This means one lawsuit and POOF! Your lifelong, hard-earned savings could be gone.

Fortunately, there is an answer. A special trust called a “Standalone Retirement Trust” (SRT) can protect inherited assets from your beneficiaries’ creditors. We’ll show you what we mean.

When your spouse, child, or other loved one inherits your retirement account, their creditors have the power to seize it and take it as their own.

If you’re like most people, you’re thinking of protecting your retirement account? Here are 5 reasons we think you’re right. Continue reading

Which Of These Powerful Secrets Could You Use To Build Your Ideal Estate Planning Legal Program

  • Keep your estate settlement simple;
  • Avoid the court-supervised Probate process when you die;

Retirement plans, including IRAs, 401Ks, 403Bs, and 457As, are not controlled by common estate planning documents such as wills and revocable living trusts. They transfer to heirs by a beneficiary designation. So whoever is named as the beneficiary when you initially signed that plans document, is the person that will receive the value in the account when you pass away.
This lack of control sometimes can be problematic, especially when an individual retirement saver has designated a beneficiary and has forgotten to keep those designations up to date. The plan documents will control where the money goes and your last will and testament will have no effect because beneficiary designations avoid probate. Your retirement plans will also not be controlled by a revocable living trust because the plans are not trust property; they are individual property.

Is The Title of A Retirement Plan Going To Be Transferred To A Trust Upon Someone’s Death?retirement

No, what happens is that beneficiary is contacted by the custodian. For example, you have an IRA in a brokerage account. You pass away, and hopefully, you have designated beneficiary’s, for example, your spouse as the primary beneficiary. The broker or your financial advisor calls up your spouse and says, “You are the designated beneficiary of this retirement account there is $100,000 in it and you have a few options for distribution. What would you like to do? Would you like to pay the income tax obligation now, cash it out and do whatever you wish with the money, or do you wish to inherit this IRA and stretch out the tax obligation over your lifetime keep it as your own retirement fund?” Now there are different rules as to whether spouses inherit or if children inherit, but that’s effectively what happens when a custodian handles the transfer to the designated beneficiary.

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Planning Your 2016 Retirement Plan Contributions

Retirement planning and contributions have been a part of America since 1875 when they were first introduced to the workforce as a private pension plan. Twenty-four years later, there were 13 private pension plans in the country and in 1913, the federal government stepped in and began taxing pensions paid, stating they were similar to wages and therefore must be taxed.

moneyOver the years, the government has set limits and added new regulations to ensure the continuity and effectiveness of retirement plans. Most people who are financially-savvy like to view the retirement plan contributions periodically. The best time to review is towards the end of a calendar year or the beginning of a new calendar year. This way, you can contribute more to your retirement plan, if you can afford it and have not reached your limits.

In December of 2015, the IRS announced that retirement-related items and limitations for pension plans for 2016 would remain the same. Continue reading

Using Bankruptcy to Protect Retirement Funds and Other Assets for SeniorsSeniors are facing several financial issues as they near retirement age — they are living longer and they are entering retirement with more debt. The financial crisis left many people struggling with debt. For those close to retirement, that debt may still be lingering. To make matters worse, seniors are entering retirement owing student debt and many owe substantial mortgage payments. For many seniors, the financial obligations result in working well beyond retirement age. For others, the debt is too overwhelming to handle on their own. They need a way to protect retirement funds while getting rid of the debt.

Using Retirement Funds to Pay Debts

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Inherited IRA – How Do I Protect This Valuable Asset?piggy bank and coin

The composition of a probate estate has changed over the past few decades. Just 40 years ago, the family home was the most valuable asset most parents left to their children. Today is much different. It has become rare to see a young couple purchase a home, put down roots and stay in that home for 40, 50 or 60 years. We live in a transient society where our jobs and lives require us to move several times before our retirement. Therefore, the concept of the family home being the bulk of an inheritance is outdated.

Individual Retirement Accounts (IRA) and other forms of retirement accounts have become one of the largest assets parents are leaving to their children. As individuals plan for retirement much earlier than before, IRAs have been growing and increasing in value for decades before the person reaches retirement age. By the age of 70.5 when an individual is able to withdraw these funds without penalties, the IRA may very well be the most valuable asset the individual owns.
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Social Security Traps That Cost You Money

Most people assume that Social Security will take care of them when they retire; however, some things that people do jeopardize the amount of their Social Security benefit because they do not fully understand all of the rules and regulations about Social Security. These Social Security traps can hurt you and your spouse’s financial well-being. Learning about Social Security traps and how to avoid those traps are the best way to ensure that you are fully prepared for your retirement.

Three Social Security Traps to Avoidfinance

Social Security Trap Number 1: Taking Money Too Early

It seems each year that the Social Security Administration raises the age for retirement. Currently, the age for full retirement benefits is 67; however, you can retire at age 62 but with penalties. If you retire at age 62, you only receive 70% of your Social Security benefits. This will last for five years until you reach the full age of retirement at 67. However, you receive several benefits if you wait until 67 to retire. First, if you wait until your full retirement age, your monthly benefit will be larger. Second, if you continue to work after the age of 62 and contribute to the Social Security fund, you will receive a higher monthly benefit than you would have received if you quit work at age 62. Third, the SSA calculates the cost of living adjustment (COLA) on the amount of your monthly benefit. If you decide to take your Social Security benefits at the age of 62, your COLA will be less than if you wait until 67 to begin receiving benefits.

Social Security Trap Number 2: Working Income

The Social Security Administration does permit individuals who are 62 years of age to begin receiving benefits while continuing to work; however, there is a penalty. If you decide to take your Social Security benefits beginning at age 62 while you are still working, your monthly benefit will be reduced. In 2015, the reduction rate is $1 for every $2 of earned income above $15,720. This reduction continues, based on your earnings from employment, until you reach the full age of retirement. The good news is that your benefits are not lost – they are simply deferred and credited to your account until you reach full retirement age.

Social Security Trap Number 3: Spousal Benefits

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