the t. rowe price Guide for IRA and 403(b) Account Beneficiaries

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "the t. rowe price Guide for IRA and 403(b) Account Beneficiaries"

Transcription

1 the t. rowe price Guide for IRA and 403(b) Account Beneficiaries

2 who should use this guide T. Rowe Price retirement specialists have designed this guide for: 1 : Individuals who are beneficiaries of the following T. Rowe Price retirement account types: Traditional and Roth IRAs (including Roth Rollover IRAs); Rollover IRAs; SEP-IRAs, SAR-SEPs, and SIMPLE IRAs; and 403(b) accounts. For the purposes of this guide, the term Traditional IRA is also used to refer to SEP-IRAs, SAR-SEPs, SIMPLE IRAs, and Rollover IRAs. 2 : Trust, estate, and charity beneficiaries. 3 : Owners of IRAs and 403(b) accounts, who can use this guide with their beneficiaries in discussing options for account assets after the owner s death. In addition, this guide may be useful if you inherit an account located at another financial institution and want to move it to T. Rowe Price. This guide is not intended to address tax issues. For information and assistance with tax issues, please consult a tax advisor. this guide does not apply to you if you are: The beneficiary of a participant in a T. Rowe Price profit sharing, money purchase pension, and/or individual 401(k) plan. The personal representative of the deceased owner of the business that sponsored a T. Rowe Price profit sharing, money purchase pension, and/or individual 401(k) plan. The beneficiary of a participant in an employer-sponsored retirement plan, including 401(k), defined benefit (traditional pension), Section 457 deferred compensation, and profit sharing or money purchase pension plan. Contact the plan administrator at the company sponsoring the retirement plan. (While SEP-IRAs, SAR-SEPs, SIMPLE IRAs, and 403(b) accounts are employer-sponsored plans, they generally are treated like IRAs for RMD purposes.) If you are a beneficiary of any of the above, contact a T. Rowe Price representative or your attorney.

3 Welcome to The T. Rowe Price Guide for IRA and 403(b) Account Beneficiaries use this guide to become familiar with: Your options, Your legal obligations, and Deadlines you need to meet as the beneficiary of a T. Rowe Price retirement account for your convenience, we ve organized this guide into five sections: section 1 > Beneficiary Basics... 2 Be sure to begin with this section because it applies to all beneficiaries. section 2 Options That Keep Your Account Assets Tax-Deferred > Spouse Beneficiary > Non-spouse Beneficiary...14 section 3 > Other Options for Spouse and Non-spouse Beneficiaries...18 section 4 Special Considerations: > Two or More Beneficiaries If you are not the only beneficiary of an account, be sure to review this section. 4.1 > Inheriting Retirement Assets Invested With Another Financial Institution > When Trusts, Estates, and Charities Are Beneficiaries...25 section 5 > For Beneficiaries Who Want to Invest Some of Their Inherited Assets... 26

4 section 1 l Beneficiary Basics beneficiary basics Understanding options, obligations, and deadlines concerning a deceased owner s IRA or 403(b) retirement account can help you make the best choices for your situation. Perhaps you re interested in maximizing tax-deferred assets for your future or for others. Maybe you are in urgent need of funds for essential expenses. Or you may be carrying out specific wishes of the account owner. Regardless, consider the potential outcomes of your decision before you take action. Some outcomes can be much more financially beneficial than others over the long term. In addition, your decision may be irrevocable. Once you ve reviewed this guide, talk with a T. Rowe Price retirement specialist at about how best to implement your decision. Notify us of the account owner s death. Please call us as soon as possible to make us aware of an account owner s death. Once we hear from you, we ll send all the necessary forms to you for completion. When you return these forms, please include a copy of the official death certificate with a raised seal. Note: Generally you do not need to make all decisions about account assets at once. For example, you can claim your inheritance by sending us the forms and certificate and decide on a distribution program later. 2

5 section 1 l Beneficiary Basics Determine if the account owner was age 70½ or older All owners of IRAs (except for Roth IRAs) and most 403(b) participants are required to start withdrawing a certain amount, called a required minimum distribution (RMD), from their retirement accounts in the year they reach age 70½ and in each year thereafter. In general, the deadline for the account owner s first RMD is April 1 of the year following the year the account owner reaches age 70½. So if the account owner s death occurred on or after this required beginning date (RBD), an RMD must be distributed for the year of the owner s death. (To determine the account owner s RBD, you can use the worksheet below.) Find out from one of our retirement specialists whether the owner s RMD for the year of death was made from a T. Rowe Price account. Please note: There is no RBD for Roth IRAs since owners are not required to take distributions. If the owner had accounts of the same type at other financial institutions, it s possible that he or she already took some or all of the RMD amount for the year of death from one or more of these other accounts. Traditional IRA and 403(b) rules permit distributing the combined minimum amount for accounts of one type between one or more accounts of the same type. Be sure to check the statements for each account type for all retirement investments. If you learn that no RMD or only a partial RMD has been distributed for the owner s year of death, you and any other beneficiaries must withdraw the required amount by the end of the year. Again, this requirement applies only if the account owner died on or after his or her RBD. Note: RBDs and RMDs do not apply to Roth IRAs. However, RMDs are required for non-spouse beneficiaries who reinvest the assets in an Inherited Roth IRA. The account owner s RBD Some of your options for inherited account assets depend on whether the account owner s death occurred before or on/after his or her RBD. Use this calculation space to determine the owner s RBD before you proceed: Account owner s date of birth: / / [A] Date account owner reached or would have reached age 70: / / [B] Add six months to B / / [C] Required beginning date (April 1 of year following the year in C ): April 1, Examples: Arnold died when he was 67 years of age, so his death occurred well before his RBD. Peter, born March 14, 1939, dies on September 15, This is the day after he turns age 70½ but still before his RBD of April 1, lucy, also born March 14, 1939, dies on April 1, 2010 on her RBD. Talk with a T. Rowe Price retirement specialist at

6 section 1 l Beneficiary Basics Know what deadlines apply Don t rush the important decision of how to deal with account assets, but do take timely action. Depending on your situation and the option you would like to choose, IRS deadlines may apply as soon as: December 31 of the account owner s year of death important if the owner of a Traditional IRA or 403(b) account died on or after his or her RBD. This is generally the deadline to withdraw the original owner s RMD for the year he or she died. If his or her RMD for that year was not satisfied, the beneficiary must take that RMD by this date. Nine months from the account owner s death important if you are considering disclaiming assets in the account. Certain states require action within nine months in order to disclaim an inheritance. You should check with an attorney or tax advisor for more information. December 31 of the year following the account owner s year of death important for most beneficiaries (including beneficiaries of Roth IRAs) because this is generally the deadline for making a distribution option decision. For most of those who can choose the life expectancy RMD option, it is the deadline for the beneficiary s first distribution from the inherited account. Be aware of potential tax implications Retirement account assets of a deceased account owner are part of his or her taxable estate, even though the assets may pass directly to account beneficiaries and avoid probate in most circumstances. Generally, assets inherited from Traditional IRAs and 403(b) accounts become taxable to the beneficiary when he or she takes a distribution from his or her beneficiary account. Assets inherited from Roth IRAs may not be taxable to the beneficiary if distributed from an Inherited Roth IRA, if certain conditions are met. Talk with a tax advisor about the tax rules that apply in your situation. Tax treatment of Roth IRAs In general, withdrawals of earnings from a Roth IRA are not taxed if the beneficiary takes a distribution at least five years after the account was originally opened by the deceased. Of course, if the beneficiary needs to withdraw all the money immediately, some taxes may be due. For more information, check with your accountant or check with our retirement specialists. 4

7 section 1 l Beneficiary Basics Know the materials you may need It s important to notify us as soon as possible of an account owner s death. This can be done by calling us at Our retirement specialists can discuss any obligations or deadlines and, if you are ready, your options as a beneficiary. To claim your inheritance, you will need: 1 2 An official death certificate with a raised seal or colored stamp. Note that only one certificate is required, even if there are multiple beneficiaries. Upon request, we will return the certificate when we have updated our records. The appropriate T. Rowe Price form. For IRAs, including SEP-IRAs, SAR-SEPs, and SIMPLE IRAs: The T. Rowe Price Inherited IRA Distribution Request Form for Beneficiaries For 403(b) accounts: The T. Rowe Price Employer-Sponsored Retirement Plan Distribution to Beneficiary form These forms can be obtained by: Downloading them online at troweprice.com/forms, Ordering with the enclosed postpaid reply card, or Calling In addition, we can help you: 1. Determine whether you are required to obtain an inheritance tax waiver form. 2. Review the account owner s T. Rowe Price accounts to determine whether he or she has any RMD obligations for the year of his or her death. (Applicable for account owners age 70½ or older at the time of death. Does not apply to Roth IRAs.) 3. Name your own beneficiary for the assets you inherit. To name a beneficiary for inherited IRAs, complete an IRA Beneficiary Designation form. For inherited 403(b) assets, complete a Beneficiary Form for Inherited T. Rowe Price Retirement Plan Accounts. To receive either form: Download it at troweprice.com/forms, or Call Talk with a T. Rowe Price retirement specialist at

8 section 1 l Beneficiary Basics Learn about your options Generally, beneficiaries have three options regarding assets in retirement accounts. You will find more complete information about each option on the pages listed below. Please note that if there are multiple beneficiaries on the account, you should act in a timely manner to preserve your options as a beneficiary. You have until December 31 of the year following the account owner s year of death to establish a separate account for your portion of the account assets. three options for account beneficiaries learn more about each option 1 keep account assets tax-deferred If you don t have an urgent, immediate need for account assets, consider an option that lets the assets, or a portion of them, continue to have the potential to accumulate tax-deferred. If you are a spouse beneficiary, see page 7. If you are a non-spouse beneficiary, see page take a distribution of account assets See page 18. If you have an urgent, immediate need for account assets, consider this option, keeping in mind any potential tax consequences. 3 disclaim assets See page 20. If accepting account assets would not be to your advantage because of personal or estate planning considerations, you may want to give up your right to some or all account proceeds. You should discuss this option with an attorney. 6

9 section 2 l Options That Keep Your Account Assets Tax-Deferred Spouse Beneficiary for a spouse beneficiary options that keep your account assets tax-deferred If you have not done so, please read Section 1 Beneficiary Basics, beginning on page 2 before you begin this section. if you are one of two or more beneficiaries of an account: Once you ve read this section, please read Special Considerations: Two or More Beneficiaries starting on page 22. As noted on page 6, multiple account beneficiaries have until December 31 of the year following the account owner s year of death to establish separate accounts for their respective portions of account assets. Establishing a separate account means you can be treated as a sole spouse beneficiary. Please note that you must be a sole spouse beneficiary to take advantage of the options discussed in this section. Please note: Consider your choices carefully since they may limit both your options and the options of your fellow beneficiaries. As a sole spouse beneficiary, you can maintain the desirable tax-deferred status of Traditional IRAs, 403(b)s, and Roth IRAs in one of two ways: Roll over the assets in your spouse s Traditional IRA or 403(b) plan account into a Traditional IRA in your own name, or roll over the assets in your spouse s Roth IRA or Roth 403(b) account into a Roth IRA in your own name. In addition, 403(b) assets may be rolled over into a Roth IRA in your own name. Leave the assets in your spouse s account. If the assets are in a Traditional IRA or 403(b) account, RMDs apply to the assets. IRS rules require that retirement account assets eventually be distributed, whether or not the distributions are needed for income. Be sure your choice of how to maximize the tax-deferred status of account assets makes the most sense given your situation and your goals for the assets. Review the following information carefully before you make your decision. For the purposes of this guide, the term Traditional IRA includes SEP-IRAs, SAR-SEPs, SIMPLE IRAs, and Rollover IRAs. Talk with a T. Rowe Price retirement specialist at

10 section 2 l Options That Keep Your Account Assets Tax-Deferred Spouse Beneficiary option 1 : roll over account assets to your own ira You may want to consider rolling over account assets to your own IRA if any of the following applies to you: You are under age 59½ and don t anticipate using income from these assets You want to preserve the assets for your beneficiaries You want to consolidate your retirement assets You are interested in taking a smaller RMD than would be required from the owner s account Please note: If you are a sole spouse beneficiary, you may roll over inherited assets into your own IRA at any time following your spouse s death as long as any RMD obligations have been met. Advantages of rolling Traditional IRA and 403(b) assets into a Traditional IRA in your own name: RMDs do not have to be made until you reach age 70½. If you are age 70½ or older, the RMD may be less from your own IRA than it would be from assets left in your spouse s account. (See table, page 12.) You may make additional contributions to the account if you meet eligibility requirements. Rolling over inherited Traditional IRA and 403(b) assets into one IRA can help to simplify account management. Your beneficiaries who are younger than you will be able to use their own actuarial life expectancies, not yours, after your death to continue tax deferral of the IRA assets. (This means their RMDs would generally be smaller than if you left the assets in the deceased owner s account.) 8

11 section 2 l Options That Keep Your Account Assets Tax-Deferred Spouse Beneficiary Please keep in mind: If you elect to roll over Traditional IRA or 403(b) account assets, you will need to be sure any RMD obligations have been met before the rollover takes place. If you are age 70½ or older, you must meet RMD obligations for your own Traditional IRA, including assets you roll over into it. We can help with our free RMD calculation and distribution program. Advantages of rolling Roth IRA and Roth 403(b) account assets into a Roth IRA in your own name: If you roll over inherited Traditional IRA or 403(b) assets to your own T. Rowe Price IRA, you can direct us to establish a convenient, free program of annual RMD life expectancy method calculations and distributions for the account for the year you reach age 70½ and thereafter. Your distributions can even be reinvested in a regular investment account at T. Rowe Price automatically. If you would like to learn more about these options, please talk with our retirement specialists. You may make additional contributions to the account if you meet eligibility requirements. Rolling over inherited Roth assets into one Roth IRA can help to simplify account management. By rolling over your spouse s Roth IRA assets to your own Roth IRA, you can continue to avoid having to take RMDs from the Roth IRA. And when you do withdraw the assets, they will be income tax-free to you and your heirs (certain exceptions may apply). Talk with a T. Rowe Price retirement specialist at

12 section 2 l Options That Keep Your Account Assets Tax-Deferred Spouse Beneficiary option 2 : leave assets in deceased owner s traditional ira or 403(b) account This option may be appropriate for a sole spouse beneficiary of an IRA or 403(b) account: Who is under age 59½ and may need to rely on income from the inherited assets to meet current living expenses. Because the distributions would be from an inherited account, they would not be subject to the 10% early withdrawal penalty. Who is older than his or her spouse and whose spouse died before the year in which he or she would have reached age 70½ or his or her RBD. The surviving spouse may delay taking required distributions until the year for which the deceased spouse would have reached age 70½. This can be an attractive option, particularly if you don t anticipate needing assets from the account in the near future. RMDs apply to the assets in your deceased spouse s Traditional IRA and 403(b) accounts, whether or not the distributions are needed for income. How you must take RMDs depends on whether your spouse s death occurred before or on/after his or her RBD: If before the RBD, you may use either of two RMD choices, which are more fully described on the following pages the life expectancy method or the five-year method. Age-Related IRS Penalty Exemption If on or after the RBD, you must use the life expectancy method, described on the following pages. Need a refresher about the account owner s RBD? See the worksheet on page 3. If you roll over an IRA or 403(b) account into your name and receive distributions prior to reaching age 59½, the distribution may be subject to an early withdrawal penalty of 10%. If you leave the assets in the deceased person s name, distributions to you are not subject to early withdrawal penalties. 10

13 section 2 l Options That Keep Your Account Assets Tax-Deferred Spouse Beneficiary Using the life expectancy method Optional if Traditional IRA or 403(b) account owner died before his or her RBD Required if owner died on or after his or her RBD Available to beneficiaries of Roth IRAs see note below.* Using the life expectancy method to take RMDs, you withdraw portions of the account assets at least annually in amounts based on IRS rules and your RMD amount changes from year to year. You must withdraw at least the RMD amount each year, but you may always take more than the required amount. If you inherit a Traditional IRA or 403(b) account, the due date of your first RMD depends on whether your spouse s death occurred before or on/after his or her required beginning date. If your spouse s death occurred before his or her RBD, your RMD payments must begin by the later of: December 31 of the year following your spouse s year of death, or December 31 of the year in which your spouse would have reached age 70½. If your spouse s death occurred on or after his or her RBD, your RMD payments must begin by December 31 of the year following your spouse s year of death. In general, the RMD for a given year (called the calculation year) is determined by dividing the account balance on December 31 of the previous year by a factor from an IRS table based on your age on your birthday in the calculation year. In each following year, the factor is reduced by one. You may withdraw life expectancy distributions at any frequency, including on an annual, semiannual, quarterly, or monthly schedule as long as you withdraw the full RMD for each year. In any year a distribution is required but not completely withdrawn, you must pay a penalty equal to 50% of the RMD that is not withdrawn. 1 * Spouses who roll over inherited assets from a Roth IRA into a Roth IRA in their own name can withdraw these assets at any time and in any amount. 1 If you fail to take the RMD or take a distribution that is too small because of a reasonable error and you take steps promptly to correct it, you may ask the IRS to refund the penalty tax. IRS Form 5329 and a letter of explanation are required for this process. We suggest you seek assistance from a tax advisor if you have not taken a distribution for a year or years in which it was required or if you have withdrawn some but not all of an RMD. Talk with a T. Rowe Price retirement specialist at

14 section 2 l Options That Keep Your Account Assets Tax-Deferred Spouse Beneficiary approximate rmd amount for sole spouse beneficiary of inherited ira or 403(b) account Approximate RMD Amount for Sole Spouse Beneficiary of Inherited IRA or 403(b) Account BENEFICIARY S AGE APPROXIMATE RMD AMOUNT on birthday in year following account owner s year of death for beneficiary for year following year of account owner s death based on IRS life expectancy tables (assumes $100,000 account balance on December 31 of previous year). Note: RMD amounts are rounded up to the nearest dollar. Leave Assets in Account Owner s Account 1 Roll Over Assets to Own Traditional IRA 2 80 $9,804 $5, ,883 3, , , , , ,588 RMDs are required only for the year you reach age 70½ and thereafter. Roth IRAs are not subject to RMDs once assets are rolled over into the surviving spouse s Roth IRA. Note that these amounts are for the year following the year of the account owner s death. Also note that while RMD amounts are listed only for beneficiary ages at 10-year increments (ages 20 80), actual RMD amounts will vary year by year according to the beneficiary s age and the previous December 31 account balance. 1 To estimate beneficiary RMDs for other account balances, multiply or divide the amounts appropriately. For example, the RMD on assets left in the owner s account for an 80-year-old beneficiary with a $200,000 balance would be approximately two times the amount shown above, or $19,608. With a $50,000 balance, it would be approximately one-half the amount shown above, or $4,902, and so on. Figures calculated using the IRS Single Life Expectancy Table, Publication 590. For more information, go to irs.gov. 2 Assumes rollover to own Traditional IRA occurs in the year of the original account owner s death. Figures calculated using the IRS Uniform Lifetime Table, Publication 590. For more information, go to irs.gov. 12

15 section 2 l Options That Keep Your Account Assets Tax-Deferred Spouse Beneficiary Using the five-year method Available to Traditional IRA and 403(b) beneficiaries only if the account owner s death occurred before his or her RBD Available to beneficiaries of Roth IRAs see note below* To take advantage of the five-year method, you must elect this option no later than December 31 of the earlier of: (a) The year that contains the fifth anniversary of your spouse s death, or (b) The year your spouse would have reached age 70½. Example: Bob died at age 50. He would not have reached age 70½ for more than 20 years, so if his wife Jean had wished to elect the five-year method, she would have had to do so by deadline (a). In contrast with the RMD life expectancy method, the five-year method does not require you to withdraw a distribution each year. In fact, you may withdraw assets from the account at any time following your spouse s death as long as all assets are withdrawn by December 31 of the fifth year following your spouse s year of death. To begin the paperwork for either the life expectancy method or the five-year method for taking RMDs from an inherited T. Rowe Price retirement account, talk with one of our retirement specialists. Meeting the RMD Requirement If you have not met either the life expectancy method or five-year method RMD requirement by the applicable IRS deadline, the IRS generally assumes you chose the life expectancy method but failed to take RMDs. If this applies to you, you should contact a tax advisor as soon as possible. *Spouses who roll over inherited assets from a Roth IRA into a Roth IRA in their own name can withdraw these assets at any time. Talk with a T. Rowe Price retirement specialist at

16 section 2.1 l Options That Keep Your Account Assets Tax-Deferred Non-spouse Beneficiary for non-spouse beneficiaries options that keep your account assets tax-deferred If you have not done so, please read Section 1 Beneficiary Basics, beginning on page 2 before you begin this section. If you are one of two or more beneficiaries of an account: Once you ve read this section, please read Special Considerations: Two or More Beneficiaries, starting on page 22. As noted on page 6, multiple account beneficiaries have until December 31 of the year following the account owner s year of death to establish separate accounts for their respective portions of account assets. Establishing a separate account means you can be treated as a sole beneficiary. Please note that you must be a sole beneficiary to take advantage of the options discussed in this section. Please note: Consider your choices carefully since they may limit both your options and the options of your fellow beneficiaries. Non-spouse beneficiaries of an IRA or 403(b) account can continue to benefit from the tax-deferred status of retirement account assets. To maintain their tax-deferred status, the assets must be kept in an Inherited IRA. These accounts are generally referred to as stretch-out IRAs because they stretch out the benefits of tax-deferred investing for the beneficiary. However, RMD requirements apply to the assets in this account, whether or not the distributions are needed for income and even if the account is a Roth IRA. How you take RMDs generally depends on whether the account owner s death occurred before or on/after his or her RBD: If before the RBD, you may use either of two RMD choices, which are more fully described on the following pages the life expectancy method or the five-year method. (This option is available to all Roth IRA beneficiaries.) If on or after the RBD, you must use the life expectancy method described on the following pages. Need a refresher about the account owner s RBD? See the worksheet on page 3. 14

17 section 2.1 l Options That Keep Your Account Assets Tax-Deferred Non-spouse Beneficiary Non-spouse beneficiaries may also make a direct transfer to an Inherited IRA known as a Stretch IRA account. The Inherited IRA will be subject to the same RMD rules that would apply to the non-spouse beneficiary of an IRA. A non-spouse beneficiary may not later roll over an Inherited IRA to his or her own IRA or to another employer-sponsored retirement plan. Special rules may apply and you may wish to seek assistance from a tax advisor. Using the life expectancy method Optional if account owner died before his or her RBD Required if owner died on or after his or her RBD Available to all Roth IRA beneficiaries Using the life expectancy method to take RMDs, you withdraw portions of account assets at least annually and your RMD amount changes from year to year. You must withdraw at least the RMD amount, but you may always take more than the required amount. Traditional IRA and 403(b) beneficiaries: All earnings and pretax contributions will be taxed as ordinary income when they are withdrawn. Roth IRA beneficiaries: Assets may be free of taxes when they are withdrawn (certain conditions apply). The first RMD must be paid in the year after the account owner s year of death. In that year (called the calculation year), the RMD is determined by dividing the account balance on December 31 of the previous year by a factor from an IRS table based on your age on your birthday in the calculation year. In each following year, the factor is reduced by one. You may withdraw life expectancy distributions on an annual, semiannual, quarterly, or monthly schedule as long as you withdraw the full RMD for each year. In any year a distribution is required but not completely withdrawn, you must pay a penalty equal to 50% of the RMD that is not withdrawn. 1 1 If you fail to take the RMD or take a distribution that is too small because of a reasonable error and you take steps promptly to correct it, you may ask the IRS to refund the penalty tax. IRS Form 5329 and a letter of explanation are required for this process. We suggest you seek assistance from a tax advisor if you have not taken a distribution for a year or years in which it was required or if you have withdrawn some but not all of an RMD. Talk with a T. Rowe Price retirement specialist at

18 section 2.1 l Options That Keep Your Account Assets Tax-Deferred Non-spouse Beneficiary approximate rmd amount for sole non-spouse beneficiary of inherited ira or 403(b) account BENEFICIARY S AGE on birthday in year following account owner s year of death APPROXIMATE RMD AMOUNT for beneficiary in year following year of account owner s death based on beneficiary s actuarial life expectancy (assumes $100,000 account balance on December 31 of previous year). Note: RMD amounts are rounded up to the nearest dollar $9, , , , , , ,588 Note: We assume that these amounts are for the year following the year of the account owner s death. Also note that while RMD amounts are listed only for beneficiary ages at 10-year increments (ages 20 80), actual RMD amounts will vary year by year according to the beneficiary s age and the previous December 31 account balance. You can direct T. Rowe Price to establish a convenient, free program of annual RMD life expectancy method calculations and distributions for your inherited T. Rowe Price retirement accounts. If you would like to learn more about this option, please talk with one of our retirement specialists. 1 To estimate beneficiary RMDs for other account balances, multiply or divide the amounts appropriately. For example, the RMD for an 80-year-old beneficiary with a $200,000 balance would be approximately two times the amount shown above, or $19,608. With a $50,000 balance, it would be approximately one-half the amount shown above, or $4,902, and so on. Figures calculated using the IRS Single Life Expectancy Table, Publication 590. For more information, go to irs.gov. 16

19 section 2.1 l Options That Keep Your Account Assets Tax-Deferred Non-spouse Beneficiary Using the five-year method Available to Traditional IRA and 403(b) beneficiaries only if the account owner s death occurred before his or her RBD Available to all Roth IRA beneficiaries Receiving all assets in the account by the end of the year containing the fifth anniversary of the account owner s death is referred to as the five-year method. To take advantage of the five-year method, you must elect this option by December 31 of the year following the account owner s year of death. In contrast with the RMD life expectancy method, the five-year method does not require you to withdraw a distribution each year. In fact, you may withdraw assets from the account at any time following the account owner s year of death as long as all assets are withdrawn by December 31 of the fifth Meeting the RMD Requirement year following the account owner s year of death. If you have not met either the life expectancy method or five-year method RMD requirement by the applicable IRS deadline, the IRS generally assumes you chose the life expectancy method but failed to take RMDs. If this applies to you, you should contact a tax advisor as soon as possible. To begin the paperwork for either the life expectancy method or the five-year method for taking RMDs from an inherited T. Rowe Price retirement account, talk with one of our retirement specialists. Talk with a T. Rowe Price retirement specialist at

20 section 3 l Other Options for Spouse and Non-spouse Beneficiaries other options for spouse and non-spouse beneficiaries If you have not done so, please read Section 1 Beneficiary Basics, beginning on page 2 before you begin this section. In addition to the distribution options, which keep account assets tax-deferred, both spouse and non-spouse beneficiaries may take a distribution of account assets or disclaim account assets. Taking a distribution As a beneficiary of an IRA or 403(b) account, you may withdraw some or all of your portion of account assets. Taking a distribution might initially seem attractive, and if you are in urgent need of account assets to meet essential expenses, it may be necessary. However, we encourage you to consider this choice carefully it does have disadvantages: All or part of the distribution from a Traditional IRA or 403(b) account may be taxed as ordinary income in the year you withdraw it unless you choose to transfer the funds into an Inherited IRA. And if the taxable amount is significant, it may move you into a higher tax bracket. (Talk with a tax advisor for help with this analysis.) Although the distribution from your inherited Roth IRA may be tax-free, you lose the power of continued tax-free growth that this account might have enjoyed. Spouse beneficiaries lose the advantage of tax-deferred growth potential if they do not roll over distributions into another tax-deferred account in their name within 60 days of the distribution. Whether you decide to withdraw account assets in a total distribution or in significant amounts, be sure to set aside enough money to pay the income taxes that are likely to be due. And before you spend any large withdrawals from the assets, T. Rowe Price suggests you check with the executor of the account owner s estate to learn whether some of the assets may be needed to pay estate taxes. 18

21 section 3 l Other Options for Spouse and Non-spouse Beneficiaries If, rather than taking a distribution now, you elect to use either RMD method (life expectancy or, if applicable, five year), you can always take an additional amount or all of the remaining account balance in the future. If, for example, your circumstances change three years from now, you may want or need to take a distribution at that time, and current rules would permit you to do so. Keep your assets invested to get the potential for tax-deferred growth A T. Rowe Price analysis shows that there can be significant benefits to leaving assets in an inherited account until needed and withdrawing only the RMD each year until that time. Talk with a T. Rowe Price retirement specialist at

22 section 3 l Other Options for Spouse and Non-spouse Beneficiaries the continuing power of tax-deferred savings The following chart shows the advantages of leaving assets in an inherited Traditional IRA. It shows the possible outcomes when Stuart, a 45-year-old non-spouse beneficiary, inherits a Traditional IRA worth $50,000. If he withdraws the entire amount immediately, Stuart would receive $37,500 after taxes. On the other hand, if Stuart withdraws only the RMD each year and waits to liquidate the IRA, he can expect to receive much more money. If he waits just 10 years, he would receive a total of $67,000 (nine years of RMDs plus final liquidation value). If he waits 30 years, his total jumps to $190,500 more than five times what he would receive by liquidating only the RMD immediately. The Total after-tax withdrawals $200, , ,000 50,000 0 $36,000 $67,000 $119,500 $190,500 Withdraw now Wait 10 years Wait 20 years Wait 30 years Assumptions: Balance in the inherited Traditional IRA on December 31 of year in which the account owner dies is $50,000. Stuart, age 45 in the year following the year of the account owner s death, is the sole beneficiary. He has a remaining life expectancy of 38.8 years based on the IRS Single Life Expectancy Table. Prior to his death, the owner received his entire RMD for the year in which he died. He had no after-tax assets in the IRA. Stuart is in the 28% federal marginal income tax bracket. Withdrawals of the entire account in year 1 or at the beginning of years 10, 20, and 30 do not increase Stuart s marginal income tax bracket. No state income taxes are considered. Investments in the IRA earn an average pretax total return of 8% annually. All withdrawals are made at the beginning of each year and not reinvested. (The size of the RMD amounts withdrawn depends on the actuarial life expectancy of the beneficiary.) The example shown is for illustrative purposes only and is not intended to represent the performance of any particular investment The assumption is based upon current tax law, and changes in these laws may significantly affect the outcome of this strategy. 30 Yrs 20 Yrs 10 Yrs Disclaiming account assets Now Any beneficiary may refuse ownership or acceptance of proceeds from a retirement account. If you are entitled to assets but disclaim them, you relinquish all claims to the assets and have no control over who receives them. Once you disclaim your inheritance, you cannot change your mind. If you wish to disclaim some or all of the assets in an account, do it promptly. Generally, you must disclaim in writing within nine months of the account owner s death to comply with IRS rules. (This is a federal deadline. Individual states deadlines and requirements vary.) 0 20

23 section 3 l Other Options for Spouse and Non-spouse Beneficiaries Do not receive any distribution from the account. Generally, you may not disclaim account assets if you have received any distribution (other than an amount required to satisfy a year s RMD) from the account after the owner s death. Disclaiming some or all assets As a beneficiary, you may disclaim some or all of the money: From all accounts, From one account, From some but not all accounts, and From one account type but not from another. For example, John is the sole beneficiary of his father s Traditional IRA. He disclaims part of the assets in that account. Marie is the sole beneficiary of her mother s Traditional IRA and two Rollover IRAs. Marie disclaims part of the assets in the Traditional IRA, choosing to receive the remaining portion of the Traditional IRA as well as all assets in one Rollover IRA. She disclaims all assets in the other Rollover IRA. If you are considering disclaiming: Consult a financial advisor for help in determining whether you meet the requirements to disclaim and, if so, whether this is an appropriate choice in your situation. Make T. Rowe Price aware: If you do not want any distributions made from the account(s) to you or to another account in your name until you instruct us otherwise. That you would like to receive information about procedures for disclaiming assets in a T. Rowe Price account(s). Be aware that you are not permitted to name a replacement beneficiary. Act promptly. If you elect to disclaim, you need to make sure you comply with federal laws, applicable state laws, and T. Rowe Price requirements. Talk with a T. Rowe Price retirement specialist at

24 section 4 l Special Considerations: Two or More Beneficiaries special considerations: two or more beneficiaries If you have not done so, please read Section 1 Beneficiary Basics, beginning on page 2 and either Section 2 or 2.1, depending on your relationship to the account owner, before you begin this section. We suggest that as one of two or more beneficiaries of a retirement account, you review and perhaps talk with us about the following information. What share of account assets is yours? Beneficiaries inherit equal shares of assets in a T. Rowe Price retirement account unless the owner specified otherwise in naming his or her beneficiaries. For example, Clare did not specify how her three children all beneficiaries of her IRA or 403(b) should share account assets, so they would each receive one-third. Jim, on the other hand, specified that his children all beneficiaries of his IRA or 403(b) share account assets as follows: Mary, 50%; Paul, 25%; and Lou, 25%. At T. Rowe Price, if a beneficiary dies before the account owner s death, the deceased beneficiary s share is generally divided proportionately among the remaining beneficiary or beneficiaries. Of course, the owner may have given other instructions to T. Rowe Price. If, for example, the owner named beneficiaries per stirpes, the deceased beneficiary s share of the assets would be inherited by that beneficiary s children or descendants, if any. Understand the designated beneficiary rule To calculate RMDs, it s necessary to determine whether the deceased account owner has a designated beneficiary. This technical term has a special meaning in the context of RMDs. Generally, the age of the oldest designated beneficiary is used to determine RMD life expectancy calculations for the account. (Because it influences RMD calculations, the designated beneficiary rule affects the amount of the RMD. However, it does not affect who receives account assets.) 22

25 section 4 l Special Considerations: Two or More Beneficiaries The following rules generally apply in determining if a deceased account owner has a designated beneficiary: Only individuals can be designated beneficiaries entities such as estates, trusts, and charities cannot. If there is even one entity (e.g., estate, trust, or charity) entitled to receive benefits on September 30 of the year following the owner s year of death, there is no designated beneficiary. If this is the case and the account owner died before his or her RBD, all beneficiaries must take RMDs using the five-year method. Only individuals (a) who are actual beneficiaries on the date of the account owner s death and (b) whose assets from the account have not been distributed by September 30 of the year after the year of the owner s death can be designated beneficiaries. Consider establishing separate accounts It s generally advantageous for multiple beneficiaries to separate their respective shares of an inherited retirement account so that each has his or her own account. Establishing separate accounts as soon as possible allows each beneficiary to consider all of his or her options. Note that each beneficiary s portion should be in a separate account by December 31 of the year after the account owner s year of death. If separate accounts have not been established by December 31 of the year following the account owner s year of death, life expectancy RMD calculations for all beneficiaries for all years must be calculated using the age of the oldest designated beneficiary. Having to use the oldest designated beneficiary s age in life expectancy method RMD calculations may be a disadvantage for younger beneficiaries, especially if there is a significant age difference. For example, Paul, who dies at age 78, named his two children, now 50 and 48, and his sister Jen, now 76, as beneficiaries of an account. Using Jen s age as the basis for RMD calculations requires higher RMDs for both children than would be the case using their own individual ages. So establishing separate accounts for each beneficiary by no later than December 31 of the year following Paul s year of death would result in lower RMDs for the children. Note also that establishing separate accounts would give each child a longer period for account assets to accumulate tax-deferred. Talk with a T. Rowe Price retirement specialist at

26 section 4.1 l Special Considerations: Inheriting Retirement Assets From Another Financial Institution special considerations: inheriting retirement assets invested with another financial institution If you inherit retirement assets that are invested with another financial institution, you have the option to transfer those assets to T. Rowe Price without affecting any tax-deferred status they may have. Get convenience and proven performance Investing more of your assets with T. Rowe Price is an effective way to simplify your investments. You ll get one clear statement that covers all your retirement and taxable accounts, so you can save time and reduce your paperwork. Having your accounts in a single place makes it easier to see how your holdings fit together and create an overall investment plan directed to your individual goals. If you re looking for new opportunities, we offer more than 70 no-load mutual funds appropriate for retirement investing that invest in stocks, bonds, and money market securities. All of our mutual fund portfolios are managed with the same disciplined investment approach because we believe it s in the best interest of our investors. And in addition to their own expertise, our experienced fund managers are backed by one of the largest and most respected independent research departments in the industry, with analysts based around the world. All funds are subject to market risk, including possible loss of principal. You may also be able to keep your existing investments from other financial institutions and consolidate using a T. Rowe Price Brokerage account. How do I transfer inherited retirement assets from another financial institution? Since you ll want to assume control over your inherited assets as soon as possible, you should consider setting up an inherited beneficiary account which is an account that lists both the decedent and you as beneficiary. After this, you can direct the inherited investments according to the options allowed by the plan and current IRS regulations. Call to see how you can transfer inherited retirement assets to T. Rowe Price or to request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. 24

27 section 4.2 l Special Considerations: When Trusts, Estates, and Charities Are Beneficiaries special considerations: when trusts, estates, and charities are beneficiaries In general, authorized representatives of trusts, charities, or estates named as beneficiaries should contact T. Rowe Price or their financial advisor for specific information on their required actions and their distribution options. The guidelines below are given only as a starting point. Each representative will be required to provide T. Rowe Price with a certified copy of the death certificate of the retirement account owner. Trust as beneficiary In addition to a certified copy of the death certificate of the account owner, the trustee of a trust that is the beneficiary must provide a certified copy of the trust agreement identifying the trust name, trustees, and any successor trustees. Please call T. Rowe Price for assistance on requirements for certification. What are the trustee s distribution options? Distribution to the trust within five years Total distribution to the trust Distribution over time based on the actuarial life expectancy(ies) of the beneficiary(ies) of the trust (permitted only if certain conditions are met) Estate as beneficiary In addition to a certified copy of the death certificate of the account owner, the executor (also known as a personal representative) must provide a certified copy of the document appointing him or her executor by the probate court. Generally, this document must have been certified within 60 days prior to its presentation to T. Rowe Price. What are the executor s distribution options? Distribution to the estate within five years Total distribution to the estate For assets that will not be disbursed immediately, consider investing them for further growth potential. Deciding how to invest inherited assets can be a complex process. That s why T. Rowe Price is ready to help in any way we can. We offer a wide range of investment tools and one-on-one guidance that can help you make decisions. If you re looking for appropriate investment ideas for these assets, our investment specialists can help. They can answer questions about specific funds or investment products we offer. Call for one-on-one guidance. Charity as beneficiary The authorized representative of the charity must provide appropriate identification in order to receive the distribution. Generally, there would be no advantage of delaying the distribution to the charity, since its investments are generally tax-exempt. Talk with a T. Rowe Price retirement specialist at

28 section 5 l For Beneficiaries Who Want to Invest Some of Their Inherited Assets low-cost investment options from t. rowe price Whether you take a lump-sum distribution or periodic RMD payments, you may want to invest at least a portion of your inheritance. If so, here are three attractive options from T. Rowe Price. T. Rowe Price Mutual Funds Reinvest assets from the account into one or more mutual funds, either through an IRA or a mutual fund account. T. Rowe Price offers more than 90 no-load mutual funds that let you invest in stocks, bonds, or money market securities. If you want to minimize your taxes, you can: Continue tax-deferred investing through a Traditional or Roth IRA with T. Rowe Price. Invest the money in a tax-efficient mutual fund (outside of an IRA) that can help make the tax bite on any future earnings less painful. Tax-efficient solutions at T. Rowe Price include federal and/or state tax-free funds and tax-efficient funds. 1 For more information on T. Rowe Price funds, return the enclosed reply card or talk with one of our retirement specialists. Call to request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. The T. Rowe Price Program for Charitable Giving SM 2 Reduce the income-tax effect of your RMDs by contributing to a donor-advised fund, such as The T. Rowe Price Program for Charitable Giving. Your RMD will be considered income for tax reporting purposes. By making a contribution to the Program for Charitable Giving (a public charity), you can offset all or part of the taxes associated with your RMD. Program contributions are deductible up to allowable IRS limits in the year you make them. Please note that you cannot make a tax-free distribution directly from your IRA to the Program for Charitable Giving. Here s how it works: Your contribution of cash or long-term appreciated securities establishes your Program account. You decide how your contributions are invested among six investment pools managed by T. Rowe Price. When you want to support your favorite causes, you simply recommend a grant distribution from your account. To learn more about the Program, visit ProgramForGiving.org, return the enclosed reply card, or consult a representative toll-free at There can be no guarantee that a fund will achieve tax efficiency. Some income from municipal funds may be subject to state and local taxes and the federal alternative minimum tax. 2 The T. Rowe Price Program for Charitable Giving SM is an independent nonprofit corporation and donor-advised fund founded by T. Rowe Price to assist individuals with planning and managing their charitable giving. 26

t. rowe price Required Minimum Distribution (RMD) Guide

t. rowe price Required Minimum Distribution (RMD) Guide t. rowe price Required Minimum Distribution (RMD) Guide contents at a glance RMD Basics 2 RMD Calculation Instructions 7 IRS Uniform Lifetime Table 8 RMD Investment Options 10 Selecting and Educating Your

More information

chart retirement plans 8 Retirement plans available to self-employed individuals include:

chart retirement plans 8 Retirement plans available to self-employed individuals include: retirement plans Contributing to retirement plans can provide you with financial security as well as reducing and/or deferring your taxes. However, there are complex rules that govern the type of plans

More information

Inheriting retirement assets as a nonspouse beneficiary

Inheriting retirement assets as a nonspouse beneficiary Inheriting retirement assets as a nonspouse beneficiary When you inherit IRAs or other retirement plan assets, you will have many planning and distribution considerations. Some of your decisions will be

More information

You ve just inherited a retirement account. Now what?

You ve just inherited a retirement account. Now what? You ve just inherited a retirement account. Now what? A step-by-step decision guide for retirement account beneficiaries. You ll need to make a decision about your inheritance. We ll help you make it with

More information

Beneficiary Planning Investor Guide. Design a plan for you and your beneficiaries

Beneficiary Planning Investor Guide. Design a plan for you and your beneficiaries Beneficiary Planning Investor Guide Design a plan for you and your beneficiaries Today is an important day. It is the day you will develop a comprehensive beneficiary plan that will let you relax, knowing

More information

David W. Donahue ʜDavid W. Donahue, Jr., CFA

David W. Donahue ʜDavid W. Donahue, Jr., CFA David W. Donahue ʜDavid W. Donahue, Jr., CFA Much is being heard these days about the stretch IRA strategy. This idea is being suggested as the answer to the IRA and estate concerns of many investors.

More information

A guide for managing your IRA inheritance. Maximize your inherited IRA and enhance your financial security.

A guide for managing your IRA inheritance. Maximize your inherited IRA and enhance your financial security. A guide for managing your IRA inheritance Maximize your inherited IRA and enhance your financial security. Make the most of your inheritance by taking advantage of continued tax-deferred growth potential.

More information

Distributions from Individual Retirement Arrangements (IRAs)

Distributions from Individual Retirement Arrangements (IRAs) Department of the Treasury Internal Revenue Service Contents What's New for 2014 1 Publication 590-B What's New for 2015 1 Cat No 66303U Reminders 2 Distributions from Individual Retirement Arrangements

More information

What you need to know about an Inherited IRA

What you need to know about an Inherited IRA What you need to know about an Understanding your choices and taking action. In this guide: Understand the basics Review your choices Take action Understand the Basics When the owner of an Individual

More information

Distributions and Rollovers from

Distributions and Rollovers from Page 1 of 6 Frequently Asked Questions about Distributions and Rollovers from Retirement Accounts Choosing what to do with your retirement savings is an important decision. Tax implications are just one

More information

Taking Your Required Minimum Distributions

Taking Your Required Minimum Distributions RETIREMENT Taking Your Required Minimum Distributions A Guide for Retirement Account Owners and Beneficiaries Taking Distributions During Your Lifetime Most people are required to start withdrawing from

More information

Originally Published: June 2012 Updated: August 2015!!

Originally Published: June 2012 Updated: August 2015!! Updated: August 2015 This educational publication is designed to provide a background for understanding the use of Individual Retirement Accounts (IRAs). It is not a substitute for professional tax advice.

More information

Frequently asked questions

Frequently asked questions Page 1 of 6 Frequently asked questions Distributions and rollovers from retirement accounts Choosing what to do with your retirement savings is an important decision. Tax implications are just one of several

More information

Required Minimum Distributions: What Every Advisor Needs to Know FOR FINANCIAL PROFESSIONAL USE ONLY / NOT FOR PUBLIC VIEWING OR DISTRIBUTION.

Required Minimum Distributions: What Every Advisor Needs to Know FOR FINANCIAL PROFESSIONAL USE ONLY / NOT FOR PUBLIC VIEWING OR DISTRIBUTION. Required Minimum Distributions: What Every Advisor Needs to Know 1 Required Minimum Distributions Upon reaching age 70½, clients must begin taking annual distributions from their IRA in accordance with

More information

The Advantages of a Stretch IRA

The Advantages of a Stretch IRA Lifetime Retirement Planning with Wachovia Securities. The Advantages of a Stretch IRA Much is being heard these days about a concept called the Stretch IRA. This phrase is bandied about as being the answer

More information

Beneficiary Payment Options for Traditional IRAs (Death Before Required Beginning Date)

Beneficiary Payment Options for Traditional IRAs (Death Before Required Beginning Date) Beneficiary Payment Options Beneficiary Payment Options for Traditional IRAs (Death Before Required Beginning Date) Frequently Asked Questions Payment Options Payment Flexibility Withholding Elections

More information

IRAs & Roth IRAs. Beneficiary or Inherited IRAs. Questions & Answers

IRAs & Roth IRAs. Beneficiary or Inherited IRAs. Questions & Answers IRAs & Roth IRAs Beneficiary or Inherited IRAs Questions & Answers Purpose The purpose of this brochure is to provide a person who is a beneficiary of a traditional IRA (including SEPs and SIMPLEs) or

More information

Distribution Options for IRA Beneficiaries. Choose the option that s best for you

Distribution Options for IRA Beneficiaries. Choose the option that s best for you Distribution Options for IRA Beneficiaries Choose the option that s best for you Let Us Help You Make An Informed Decision Before you begin It s important to understand your choices and the best options

More information

Facts to Know When You Inherit a Non-Spousal IRA

Facts to Know When You Inherit a Non-Spousal IRA Facts to Know When You Inherit a Non-Spousal IRA There are many planning and distribution considerations for individuals inheriting a non-spouse s IRA (Traditional, Roth, SEP or SIMPLE). It is imperative

More information

This article focuses on rollovers by a

This article focuses on rollovers by a Rollovers From Retirement Plans and IRAs By Marcia Chadwick Holt This article focuses on rollovers by a surviving spouse and by a nonspouse to retirement plans and individual retirement accounts (IRAs).

More information

Key Concepts for Required Minimum Distributions from IRAs and Qualified Retirement Plans

Key Concepts for Required Minimum Distributions from IRAs and Qualified Retirement Plans Key Concepts for Required Minimum Distributions from IRAs and Qualified Retirement Plans WSU Accounting & Auditing Conference Tuesday, May 20, 2014 Presented By: Steven P. Smith Hinkle Law Firm LLC 301

More information

10Common IRA mistakes

10Common IRA mistakes 10Common IRA mistakes Help protect your valuable retirement assets You ve worked hard to build your retirement assets. And you want them to continue to work hard for you throughout your working career

More information

REQUIRED MINIMUM DISTRIBUTIONS

REQUIRED MINIMUM DISTRIBUTIONS MAKING ADVISED CHOICES RETIREMENT UN D E R S TA N D I N G REQUIRED MINIMUM DISTRIBUTIONS PRUDENTIAL CAN HELP Prudential has developed this guide to help you avoid common and costly mistakes, provide valuable

More information

Rules for Taking Distributions from Tax-Deferred Retirement Savings Plans

Rules for Taking Distributions from Tax-Deferred Retirement Savings Plans Rules for Taking Distributions from Tax-Deferred Retirement Savings Plans Putting money into an employer s retirement plan or IRA is just the first step toward financial security in retirement. How you

More information

Traditional and Roth IRAs

Traditional and Roth IRAs Traditional and Roth IRAs Information Kit, Disclosure Statement and Custodial Agreement NOT FDIC INSURED \ NO BANK GUARANTEE \ MAY LOSE VALUE FRM-IRADISC(1/11) State Street Bank and Trust Company Universal

More information

10 common IRA mistakes

10 common IRA mistakes 10 common mistakes Help protect your valuable retirement assets Not FDIC Insured May Lose Value No Bank Guarantee Not Insured by Any Government Agency You ve worked hard to build your retirement assets......

More information

Table of Contents. Page 1

Table of Contents. Page 1 Table of Contents Frequently Asked Questions... 2 Individual Retirement Arrangements (IRAs)... 2 IRA Basics... 2 Why should I name beneficiaries for my IRA?... 2 Traditional IRAs... 9 Roth IRAs... 13 SEP

More information

Understanding IRA distributions

Understanding IRA distributions Understanding IRA distributions A retirement distribution guide Allianz Life Insurance Company of New York Allianz Life Insurance Company of North America AMK-019-N Page 1 of 12 It s important to know

More information

Taking the next step. A guide for beneficiaries

Taking the next step. A guide for beneficiaries Taking the next step A guide for beneficiaries TIAA-CREF listening, caring, ready to serve At TIAA-CREF, we ve been helping people build their financial futures for nearly a century. We started out offering

More information

What are my options if I inherit an IRA or benefit from an employer-sponsored plan?

What are my options if I inherit an IRA or benefit from an employer-sponsored plan? Ebert Associates What are my options if I inherit an IRA or benefit from an employer-sponsored plan? Answer: If you don't want the money, you can always disclaim (refuse to accept) the inherited IRA or

More information

Minimum distribution. Making it simple

Minimum distribution. Making it simple Minimum distribution Making it simple Required minimum distributions What you need to know What are required minimum distributions?... 03 TIAA-CREF s Minimum Distribution Option (MDO)... 04 Is the Minimum

More information

Lifetime retirement planning. Extending your legacy with beneficiary planning

Lifetime retirement planning. Extending your legacy with beneficiary planning Lifetime retirement planning Extending your legacy with beneficiary planning Beneficiary planning within retirement accounts The money you save for retirement makes up a large portion of the wealth you

More information

Your pension benefit options

Your pension benefit options 2 Your pension benefit options Traditional pension plans generally provide the option of a lump-sum payment or a fixed monthly payment for life through an annuity. The fixed monthly payment amount is usually

More information

MFS Retirement Strategies Stretch IRA and distribution options READY, SET, RETIRE. Taking income distributions during retirement

MFS Retirement Strategies Stretch IRA and distribution options READY, SET, RETIRE. Taking income distributions during retirement MFS Retirement Strategies Stretch IRA and distribution options READY, SET, RETIRE Taking income distributions during retirement ASSESS YOUR NEEDS INCOME WHEN YOU NEED IT Choosing the right income distribution

More information

State Street Bank and Trust Company Universal Individual Retirement Account Information Kit

State Street Bank and Trust Company Universal Individual Retirement Account Information Kit State Street Bank and Trust Company Universal Individual Retirement Account Information Kit The Federated Funds State Street Bank and Trust Company Universal Individual Retirement Custodial Account Instructions

More information

From Mark Andres. Blommer Peterman, S.C.

From Mark Andres. Blommer Peterman, S.C. Using Trusts to Protect Inherited IRAs Volume 8, Issue 3 Many clients have large IRAs and retirement plan accounts and need special estate planning for these assets. A 2009 study by the Investment Company

More information

premiere select Rollover IRA Invest in your retirement today.

premiere select Rollover IRA Invest in your retirement today. premiere select Rollover IRA Invest in your retirement today. Leaving your current job can be challenging in any environment. For many of us, it can also be a bit overwhelming. That s why it s comforting

More information

ESTATE PLANNING AND IRAs

ESTATE PLANNING AND IRAs ESTATE PLANNING AND IRAs The Selection of a Traditional IRA Beneficiary Presented by Edward Jones Trust Company This outline was intended solely to facilitate discussion regarding certain estate planning

More information

Supplement to IRA Custodial Agreements

Supplement to IRA Custodial Agreements Supplement to IRA Custodial Agreements Effective December 31, 2014, the update below will be made to the American Century Custodial agreements for the following retirement accounts: Traditional IRAs, Roth

More information

EXPLORING YOUR IRA OPTIONS. Whichever you choose traditional or Roth investing in an IRA is a good step toward saving for retirement.

EXPLORING YOUR IRA OPTIONS. Whichever you choose traditional or Roth investing in an IRA is a good step toward saving for retirement. EXPLORING YOUR IRA OPTIONS Whichever you choose traditional or Roth investing in an IRA is a good step toward saving for retirement. 2 EXPLORING YOUR IRA OPTIONS Planning for retirement can be a challenging

More information

Inherited IRA Information Sheet

Inherited IRA Information Sheet Inherited IRA Information Sheet Inheriting an IRA, whether it s a Traditional or Roth, raises a lot of questions. If you are reading this information sheet, the likelihood is that you are either the beneficiary

More information

Tax Strategies From a Financial Planning Perspective

Tax Strategies From a Financial Planning Perspective Tax Strategies From a Financial Planning Perspective Spectrum Advisors Don Goerner offers securities through Purshe Kaplan Sterling Investments Member FINRA/ SIPC Headquartered at 18 Corporate Woods Blvd.,

More information

IRA Maximization. Wealth transfer strategies to enhance your legacy CLC.1124 (05.14)

IRA Maximization. Wealth transfer strategies to enhance your legacy CLC.1124 (05.14) Maximization Wealth transfer strategies to enhance your legacy CLC.1124 (05.14) Congratulations! For many years you ve put in the hard work planning, saving and investing for retirement. With all of that

More information

2008-2012 $5,000 2013-2015 $5,500 Future years Increased by cost-of-living adjustments (in $500 increments)

2008-2012 $5,000 2013-2015 $5,500 Future years Increased by cost-of-living adjustments (in $500 increments) Part One of the Disclosure Statement describes the rules applicable to Traditional IRAs. IRAs described in these pages are called Traditional IRAs to distinguish them from the Roth IRAs, which are described

More information

Retirement Plan Distributions Choices & Opportunities

Retirement Plan Distributions Choices & Opportunities Retirement Plan Distributions Choices & Opportunities Leaving Your Job: Things to Think About» What you want to do next Work full time? Part time? Retire? How much will your lifestyle cost?» Continuing

More information

Roth 401(k) Analyzer SM

Roth 401(k) Analyzer SM Roth 401(k) Analyzer SM Supplemental Information Report Pre-tax or Roth 401(k)? Background Information Starting January 1, 2006, employers may add a new feature called a Roth 401(k) to their new or existing

More information

Table of Contents. Participant Section

Table of Contents. Participant Section Table of Contents Participant Section Introduction...1 Planning Ahead...1 Distribution Making Your Choice...2 Other Considerations...5 Joint Life and Survivor Expectancy Table...7 Single Life Expectancy

More information

Payout Guide A GUIDE TO OPTIONS FOR YOUR STATE OF MICHIGAN 401(K) AND 457 PLAN ACCOUNTS. 1-800-748-6128 http://stateofmi.ingplans.

Payout Guide A GUIDE TO OPTIONS FOR YOUR STATE OF MICHIGAN 401(K) AND 457 PLAN ACCOUNTS. 1-800-748-6128 http://stateofmi.ingplans. Payout Guide A GUIDE TO OPTIONS FOR YOUR STATE OF MICHIGAN 401(K) AND 457 PLAN ACCOUNTS 1-800-748-6128 http://stateofmi.ingplans.com State of Michigan 401(k) and 457 Plan Participant: You ve worked hard

More information

Inherited Retirement Plans

Inherited Retirement Plans FPA-NCA Inherited Retirement Plans Presented by: Helen Modly, CFP, CPWA Focus Wealth Management, Ltd. These Rules Apply For: 401(k), 403(b), 457(b) IRA, SEP-IRA, SIMPLE IRA ROTH 401(k) ROTH IRA (after

More information

TSP Death Benefits: The Participant. Your Beneficiary Designation

TSP Death Benefits: The Participant. Your Beneficiary Designation TSP Death Benefits: The Participant As a participant in the Thrift Savings Plan (TSP), you will likely accumulate a sizeable amount of money in your TSP account over the years. One of the things you need

More information

Traditional and Roth IRAs

Traditional and Roth IRAs october 2012 Understanding Traditional and Roth IRAs summary An Individual Retirement Account (IRA) is a powerful savings vehicle that can help you meet your financial goals. As shown in the chart on page

More information

Questions and Answers about the Roth 401(k)

Questions and Answers about the Roth 401(k) THE RETIREMENT GROUP AT MERRILL LYNCH Q A Questions and Answers about the Roth 401(k) How the Roth 401(k) Works Q. What is the Roth 401(k) contribution option? A. The Roth 401(k) contribution option allows

More information

RETIREMENT PLANNING FOR THE SMALL BUSINESS

RETIREMENT PLANNING FOR THE SMALL BUSINESS RETIREMENT PLANNING FOR THE SMALL BUSINESS PI-1157595 v1 0950000-0102 II. INCOME AND TRANSFER TAX CONSIDERATIONS A. During Participant s Lifetime 1. Prior to Distribution Income tax on earnings on plan

More information

The. Estate Planner. Do you have a liquidity plan? Being elastic can be fantastic. A blended family requires smart estate planning

The. Estate Planner. Do you have a liquidity plan? Being elastic can be fantastic. A blended family requires smart estate planning The Estate Planner January/February 2010 Do you have a liquidity plan? Being elastic can be fantastic Stretch your retirement savings for yourself and your heirs A blended family requires smart estate

More information

Rollover IRAs. Consider the advantages of consolidating your retirement savings

Rollover IRAs. Consider the advantages of consolidating your retirement savings Rollover IRAs Consider the advantages of consolidating your retirement savings Consider the Advantages of Consolidating Your Retirement Savings If you have changed jobs, left the workforce or plan to

More information

How to Avoid the Top Ten IRA Rollover Errors

How to Avoid the Top Ten IRA Rollover Errors IRA Rollover How to Avoid the Top Ten IRA Rollover Errors To err is human, but when it comes to your money, little mistakes can cost a lot. That s especially true with Individual Retirement Accounts (IRAs).

More information

Inheriting an IRA Individual Beneficiary Checklist

Inheriting an IRA Individual Beneficiary Checklist Inheriting an IRA Individual Beneficiary Checklist PO Box 55932 Boston, MA 02205-5932 800-240-4313 Re-registration Requirements Completed Janus IRA Beneficiary Claim Form Individual Beneficiary Certified

More information

A New Use for Your. a donor s guide. The Stelter Company

A New Use for Your. a donor s guide. The Stelter Company A New Use for Your R E T I R E M E N T P L A N A S S E T S a donor s guide The Stelter Company APPRECIATED PROPERTY Learn how to uncover the value of your appreciated assets. Like many Americans, you are

More information

WHICH TYPE OF IRA MAKES THE MOST SENSE FOR YOU?

WHICH TYPE OF IRA MAKES THE MOST SENSE FOR YOU? WHICH TYPE OF IRA MAKES THE MOST SENSE FOR YOU? In 1974, when IRAs were first created, they were rather simple and straightforward. Now, 35 years later, it s challenging to know the best way to save more

More information

Minimum Distributions & Beneficiary Designations: Planning Opportunities

Minimum Distributions & Beneficiary Designations: Planning Opportunities 28 $ $ $ RETIREMENT PLANS The rules regarding distributions and designated beneficiaries are complex, but there are strategies that will help minimize income and estate taxes. Minimum Distributions & Beneficiary

More information

LIVING WELL IN RETIREMENT. Minimum Distribution: Making it simple

LIVING WELL IN RETIREMENT. Minimum Distribution: Making it simple LIVING WELL IN RETIREMENT Minimum Distribution: Making it simple TIAA-CREF: FINANCIAL SERVICES FOR THE GREATER GOOD. TIAA-CREF is dedicated to serving the retirement needs of those in the academic, medical,

More information

Estate Planning for Retirement Benefits

Estate Planning for Retirement Benefits Estate Planning for Retirement Benefits April Caudill, J.D., CLU, ChFC, AEP Senior Advanced Planning Attorney Advanced Financial Security Planning Northwestern Mutual The Northwestern Mutual Life Insurance

More information

KEY FACTORS WHEN CONSIDERING A ROTH IRA CONVERSION

KEY FACTORS WHEN CONSIDERING A ROTH IRA CONVERSION KEY FACTORS WHEN CONSIDERING A ROTH IRA CONVERSION PERTINENT INFORMATION Mr. Kugler has accumulated $1,000,000 in a traditional IRA. Mrs. Kugler is the designated beneficiary (DB) and their daughter is

More information

Common IRA Mistakes. Help protect your valuable retirement assets

Common IRA Mistakes. Help protect your valuable retirement assets 10 Common IRA Mistakes Help protect your valuable retirement assets 0208:1304514 ML2007-1677A Issued by John Hancock Life Insurance Company (U.S.A.) New York: John Hancock Life Insurance Company of New

More information

Beneficiar y Payment Options for Roth IRAs

Beneficiar y Payment Options for Roth IRAs Beneficiary Payment Options Beneficiar y Payment Options for Roth IRAs Frequently Asked Questions Payment Options Payment Flexibility Withholding Elections TABLE OF CONTENTS INTRODUCTION.......................

More information

BENEFICIARY PAYMENT OPTIONS

BENEFICIARY PAYMENT OPTIONS BENEFICIARY PAYMENT OPTIONS FOR ROTH IRAS TABLE OF CONTENTS INTRODUCTION................... Page 2 QUESTIONS AND ANSWERS........ Page 3 PAYMENT OPTIONS............... Page 6 Lump Sum........................

More information

ira individual retirement accounts Traditional IRA

ira individual retirement accounts Traditional IRA ira individual retirement accounts Traditional IRA Grow dollars for tomorrow, save on taxes today. A traditional IRA may provide you significant immediate tax savings, and due to the deferral of all taxes

More information

Leaving your employer? Options for your retirement plan

Leaving your employer? Options for your retirement plan Leaving your employer? Options for your retirement plan Contents Evaluating your options 1 The benefits of tax-deferred investing 4 Flexibility offered by an IRA rollover 6 How to get started 9 Evaluating

More information

INDIVIDUAL 401(k) Plan

INDIVIDUAL 401(k) Plan INDIVIDUAL 401(k) Plan Guidebook Contents WELCOME. When you commit to saving for retirement, you want to invest with a company that shares your dedication to hard work and results. At T. Rowe Price, we

More information

To Roth or Not Revised September 2013

To Roth or Not Revised September 2013 Introduction To Roth or Not Revised September 2013 Tax law allows all taxpayers (without income limitation) to convert all or part of their traditional IRAs to Roth IRAs. Even though conversion to Roth

More information

Sample. Table of Contents. Introduction... 1. What is the difference between a regular 401(k) deferral (pre-tax) and a Roth 401(k) deferral?...

Sample. Table of Contents. Introduction... 1. What is the difference between a regular 401(k) deferral (pre-tax) and a Roth 401(k) deferral?... Table of Contents Introduction... 1 What is the difference between a regular 401(k) deferral (pre-tax) and a Roth 401(k) deferral?... 2 Who is eligible to make a Roth 401(k) deferral?... 3 Roth IRAs have

More information

Inheriting an MNDCP account

Inheriting an MNDCP account Inheriting an MNDCP account Non-Spouse as beneficiary When a non-spouse beneficiary inherits an MNDCP 457(b) account, careful consideration must be taken when choosing what to do with the account. This

More information

Traditional and Roth IRAs. Invest for retirement with tax-advantaged accounts

Traditional and Roth IRAs. Invest for retirement with tax-advantaged accounts Traditional and s Invest for retirement with tax-advantaged accounts Your Retirement It is your ultimate reward for a lifetime of hard work and dedication. It is a time when you should have the financial

More information

IRAs Traditional Individual Retirement Accounts. 2014 and 2015. Questions & Answers

IRAs Traditional Individual Retirement Accounts. 2014 and 2015. Questions & Answers IRAs Traditional Individual Retirement Accounts 2014 and 2015 Questions & Answers What is the purpose of this brochure? It summarizes the primary laws governing traditional IRAs for 2014 and 2015. What

More information

IRAs Traditional Individual Retirement Accounts. 2013 and 2014. Questions & Answers

IRAs Traditional Individual Retirement Accounts. 2013 and 2014. Questions & Answers IRAs Traditional Individual Retirement Accounts 2013 and 2014 Questions & Answers What is the purpose of this brochure? It summarizes the primary laws governing traditional IRAs for 2013 and 2014. What

More information

The IRA Rollover. Making Sense Out of Your Retirement Plan Distribution

The IRA Rollover. Making Sense Out of Your Retirement Plan Distribution The IRA Rollover Making Sense Out of Your Retirement Plan Distribution Expecting a Distribution? You have been a participant in your employer s retirement plan for a number of years, and you have earned

More information

Pacific. Income Provider. A Single-Premium, Immediate Fixed Annuity for a Confident Retirement. Client Guide 9/15 80002-15A

Pacific. Income Provider. A Single-Premium, Immediate Fixed Annuity for a Confident Retirement. Client Guide 9/15 80002-15A Pacific Income Provider A Single-Premium, Immediate Fixed Annuity for a Confident Retirement 9/15 80002-15A Client Guide Why Pacific Life Pacific Life has more than 145 years of experience, and we remain

More information

Retirement Income: 401(k) and Other Employer-Sponsored Retirement Plans

Retirement Income: 401(k) and Other Employer-Sponsored Retirement Plans Reno J. Frazzitta Investment Advisor Representative 877-909-7233 www.thesmartmoneyguy.com Retirement Income: 401(k) and Other Employer-Sponsored Retirement Plans Page 1 of 10, see disclaimer on final page

More information

Inherited Traditional IRAs for Non-Spouse Beneficiaries.

Inherited Traditional IRAs for Non-Spouse Beneficiaries. Rev. 9-4-2015 Inherited Traditional IRAs for Non-Spouse Beneficiaries. The Webinar will be starting shortly. 8:45am CST or 1:00pm CST Copyright 2015 Collin W. Fritz & Associates, Ltd. The Pension Specialists

More information

NORTHEAST INVESTORS TRUST. 125 High Street Boston, MA 02110 Telephone: 800-225-6704

NORTHEAST INVESTORS TRUST. 125 High Street Boston, MA 02110 Telephone: 800-225-6704 NORTHEAST INVESTORS TRUST traditional IRA INVESTOR S KIT 125 High Street Boston, MA 02110 Telephone: 800-225-6704 Table of Contents NORTHEAST INVESTORS TRUST TRADITIONAL IRA DISCLOSURE STATEMENT...1 INTRODUCTION...1

More information

Extending Retirement Assets: A Stretch IRA Review

Extending Retirement Assets: A Stretch IRA Review Extending Retirement Assets: A Stretch IRA Review Are you interested in the possibility of using the funds in your traditional IRA to provide income to one or more generations of family members? Table

More information

Guide to Individual Retirement Accounts. Make a secure retirement yours

Guide to Individual Retirement Accounts. Make a secure retirement yours Guide to Individual Retirement Accounts Make a secure retirement yours Retirement means something different to everyone. Some dream of stopping employment completely and some want to continue working.

More information

Thursday, March 26 2015 WRM# 15-11

Thursday, March 26 2015 WRM# 15-11 Thursday, March 26 2015 WRM# 15-11 The WRMarketplace is created exclusively for AALU Members by the AALU staff and Greenberg Traurig, one of the nation s leading tax and wealth management law firms. The

More information

UND U E ND R E S R T S A T ND A I ND NG N TR T ADI AD TI T ONAL O AN A D R N O D R T O H I T R H I AS A INVESTO T R GUIDE RETIREMENT

UND U E ND R E S R T S A T ND A I ND NG N TR T ADI AD TI T ONAL O AN A D R N O D R T O H I T R H I AS A INVESTO T R GUIDE RETIREMENT UNDERSTANDING TRADITIONAL AND ROTH IRAS INVESTOR GUIDE RETIREMENT Not FDIC Insured May Lose Value Not Bank Guaranteed Get Ready for Retirement... Your Way Forget rocking chairs and lingering sunsets. Your

More information

THE POWER OF AN IRA.

THE POWER OF AN IRA. THE POWER OF AN IRA. Put the Power of an IRA to Work For You Whether retirement seems like a lifetime away or is just around the corner, getting started on your retirement savings plan is one of the smartest

More information

Traditional IRA and Roth IRA

Traditional IRA and Roth IRA Traditional IRA and Roth IRA Plan Today for a Secure Tomorrow lord abbett retirement services Bring an Unwavering Commitment to Your Retirement Plan Founded in 1929, Lord Abbett is an independent, privately

More information

3/15 23203-15A. Annuity Distribution Options for Your Beneficiaries

3/15 23203-15A. Annuity Distribution Options for Your Beneficiaries 3/15 23203-15A Annuity Distribution Options for Your Beneficiaries Getting Started Beneficiary distribution options tied to annuity assets may differ depending on the types of retirement assets as well

More information

Traditional IRA/Roth IRA

Traditional IRA/Roth IRA premiere select Traditional IRA/Roth IRA Invest in your retirement today. Saving for your retirement. 01 Important Section in head any lorem market. ipsum dolore sit amet If you re planning for your future,

More information

BMO Funds State Street Bank and Trust Company Universal Individual Retirement Account Disclosure Statement. Part One: Description of Traditional IRAs

BMO Funds State Street Bank and Trust Company Universal Individual Retirement Account Disclosure Statement. Part One: Description of Traditional IRAs BMO Funds State Street Bank and Trust Company Universal Individual Retirement Account Disclosure Statement Part One: Description of Traditional IRAs Part One of the Disclosure Statement describes the rules

More information

You ve worked hard for your savings. Now keep your savings working hard for you.

You ve worked hard for your savings. Now keep your savings working hard for you. You ve worked hard for your savings. Now keep your savings working hard for you. Retire with confidence A guide to your distribution options. You are now faced with an important financial decision When

More information

Planning Y. our. Your 4 03(b) Distributions

Planning Y. our. Your 4 03(b) Distributions Planning Y our Your 4 03(b) Distributions 4 Planning Your 403(b) Distributions Congratulations on your decision to set aside money in a 403(b) Custodial Account! Now it s time for another decision: How

More information

The IRA opportunity: To Roth or not to Roth?

The IRA opportunity: To Roth or not to Roth? The IRA opportunity: To Roth or not to Roth? Vanguard research July 2011 Executive summary. The year 2010, which may well go down in IRA history as the year of the Roth, saw three notable legislative changes

More information

IRAs & Roth IRAs. IRA-to-IRA Rollovers & Transfers. Questions & Answers

IRAs & Roth IRAs. IRA-to-IRA Rollovers & Transfers. Questions & Answers IRAs & Roth IRAs IRA-to-IRA Rollovers & Transfers Questions & Answers Purpose: The intent of this brochure is to provide an overview of rollovers, transfers, and conversions between traditional IRAs and

More information

Traditional IRAs. Understanding Required Distributions at 70 1 / 2. Questions & Answers

Traditional IRAs. Understanding Required Distributions at 70 1 / 2. Questions & Answers Traditional IRAs Understanding Required Distributions at 70 1 / 2 Questions & Answers Why are there federal tax rules mandating required minimum distributions from a traditional IRA? The primary purpose

More information

Traditional and Roth IRAs. Invest for retirement with tax-advantaged accounts

Traditional and Roth IRAs. Invest for retirement with tax-advantaged accounts Traditional and Roth IRAs Invest for retirement with tax-advantaged accounts Your Retirement It is your ultimate reward for a lifetime of hard work and dedication. It is a time when you should have the

More information

IRA Beneficiary Election Form For assistance, please contact us at 1-800-243-1574 or visit our website at Virtus.com

IRA Beneficiary Election Form For assistance, please contact us at 1-800-243-1574 or visit our website at Virtus.com Virtus Investment Partners PO Box 9874 Providence, RI 02940-8074 IRA Beneficiary Election Form For assistance, please contact us at 1-800-243-1574 or visit our website at Virtus.com Important Information

More information

DEATH BENEFIT DISTRIBUTION CLAIM

DEATH BENEFIT DISTRIBUTION CLAIM DEATH BENEFIT DISTRIBUTION CLAIM - 2 DEATH BENEFIT DISTRIBUTION CLAIM INSTRUCTIONS AND OPTIONS If you believe you have been named a beneficiary of a Plan Participant s assets in the New York State Deferred

More information

Death Benefit Distribution Claim Form Non-Spousal Beneficiary

Death Benefit Distribution Claim Form Non-Spousal Beneficiary Death Benefit Distribution Claim Form Non-Spousal Beneficiary READ THE ATTACHED IRS SPECIAL TAX NOTICE: IF THE PLAN ALLOWS FOR AN ANNUITY OPTION, READ THE WRITTEN EXPLANATION OF QUALIFIED JOINT AND 50%

More information

Advanced IRAs Strategies:

Advanced IRAs Strategies: Advanced IRAs Strategies: Five Ways to Take Income from an IRA NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE Copyright 2012 by Lord, Abbett & Co. LLC. All rights reserved. Lord Abbett mutual fund shares

More information