Description

Large pre-tax retirement accounts such as Traditional IRAs, 401(k) plans and the like are great savings vehicles for retirement. The problem is, they make for lousy and tax laden estate planning.

The tax authorities have a claim to the money in these accounts, and the retirement and tax laws surrounding them are very complex and ever-changing.

This requires careful strategizing if you have large balances in pre-tax retirement accounts in order to pass this money in a tax-efficient manner to your surviving spouse, children, or favorite charitable organizations.

In the end it’s not about how much you’ve accumulated, it’s about how much you keep.

More specifically, I discuss:

• The tax authorities and your retirement account: The Distribution Phase vs. Accumulation Phase
• Understanding what will happen to pre-tax retirement accounts when inherited
• A summary of the new retirement and tax laws that complicate retirement accounts and estate planning:
• Adult children as beneficiaries of your retirement account
• A surviving spouse as beneficiary of your retirement account
• Other types of beneficiaries such as a charity
• Strategies to consider in order to pass more of your unused retirement savings to a spouse and other beneficiaries
• Trusts as beneficiaries of retirement accounts
• Additional considerations and things to avoid

Resources:

• Access Show Notes and Sign Up for the Retired·ish Newsletter HERE
• Free Retirement Jump-Start Analysis 
• Ask Cameron A Question!

The key moments in this episode are:

00:00:00 - Importance of Estate Planning for Retirement Accounts

00:02:13 - Complex Retirement and Tax Laws

00:04:20 - Challenges of Passing Wealth Efficiently

00:08:01 - Inheriting Retirement Accounts and Tax Implications

00:13:00 - Strategies for Beneficiaries

00:16:18 - Options for Spouse Beneficiaries

00:19:27 - Charitable Considerations

00:22:09 - Leaving Retirement Accounts to Trusts

00:25:27 - Things to Avoid and Consider

00:27:51 - Additional Guidance and Resources