Dedicated to Deposits: Deals, Data, and Discussion
Featured Savings Rates
Featured Accounts
Back to Budgeting and Taxes

The $180,000 Mistake Hidden In Your IRA

Thursday, January 10, 2013 - 9:57 AM
From US News & World Report via Yahoo Finance:
With trillions upon trillions of dollars locked away in tax-deferred accounts like traditional IRAs and 401(k)s, should come as no surprise that the largest asset you own is probably your retirement account. For decades you've saved religiously for your retirement but there's one thing missing; you have yet to pay any taxes on the money you've saved. Hidden deep in your well-planned retirement plan is a potentially huge hidden and expensive mistake that may cost your family hundreds of thousands of dollars. 

[...] the average time it takes your beneficiaries to cash in your IRA is--drum roll please--93 days. The largest asset you own, something it's taken you decades and decades to save, can literally be slashed by income taxes by 40 percent because of a lack of or incomplete estate planning.

Read more
5
pearlbrownpearlbrown1,356 posts since
Nov 2, 2010
Rep Points: 5,955
1. Thursday, January 10, 2013 - 12:06 PM
Pearl:  This is a very important article and one everyone who has an IRA should heed.  I go a stop further.  I typed up information for our IRA contingency beneficiary and attached a newspaper article stating basically the same info in the article you posted.  I also warn the person that the money should not be withdrawn in one lump sum due to taxes and gave info as to what to do if and when they inherit the money.  The first thing young people want to do with such funds is to think they can put it in a savings account and spend as they want.  They have to know with IRAs there are expensive consequences for doing this.  I have gone to a lot of trouble to have good info available for our beneficiary and I just hope the person takes the time to read the information.   I also give the IRS Publication they can read if they want more information about inherited IRAs.  Just because we become deceased doesn't mean our responsibility as a good parent stops.   Thanks for sharing the article.  We can never have too many reminders about the responsibilities of owning and inheriting an IRA.
2
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,083
Reply