An increasingly important component of your estate plan is the retirement benefits which you have accumulated under your employer's retirement program and amounts you have accumulated in your Individual Retirement Accounts (IRAs), including your Roth IRAs. Although these benefits usually pass directly to your beneficiaries through the use of a beneficiary designation specifically designed for your plan or IRA, the full value of your retirement benefits are included in your estate and can generate estate tax at the time of your death. Such a result often surprises many clients. The Estate Planning Attorneys of Schwartz Manes Ruby & Slovin understand the complex rules which govern retirement benefits and work with you to design an estate plan that passes your retirement benefits to the individuals, trusts or charities you designate in the most tax-effective manner.
At first blush it would seem that planning with respect to your retirement benefits should be quite easy. You decide the identity of your beneficiary and complete the appropriate form. Unfortunately, planning for your own retirement and determining how these retirement benefits will be paid to your beneficiaries after your death is not that simple. First, there are rules that require that you begin taking distributions from your retirement accounts when your reach the age of 70 1/2 (or in some instances when you actually retire from your place of employment.) Although you may believe that your selection of beneficiaries has no impact on the amount or timing of the retirement benefits you must withdraw each year, your selection of beneficiary does, in fact, determine how much and how quickly you must withdraw benefit from your retirement accounts. If you fail to plan for this decision by the time you attain age 70 1/2, you will have to take your benefits more quickly than the rules require and will lose the opportunity to continue the income tax deferral to your beneficiaries.
Schwartz Manes Ruby & Slovin's Estate Planning Attorneys are knowledgeable and experienced in applying these rules in a manner that help you plan for your own retirement and for the security of your beneficiaries.
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