By: Seymour Goldberg, CPA, MBA (Taxation) JD, a senior partner in the law firm of Goldberg & Goldberg, P.C.
Retirement assets often represent a substantial portion of a taxpayer’s wealth. The retirement assets may be accumulated in a 401(k) plan, 403(b) arrangement, in another kind of qualified plan, or in an IRA. Regardless of the retirement arrangement involved, the tax consequences of making the right move at the right time can be financially beneficial—or, conversely, financially hazardous—for the taxpayer and the taxpayer’s family. The Tax Cuts and Jobs Act has made tax planning with retirement assets more important than ever.
This guide will help you avoid common errors in dealing with inherited IRAs and the maze of these rules that are often missed by beneficiaries, whether they are nonspouse beneficiaries or a spouse beneficiary. There is no requirement under the IRS rules that financial institutions advise the heirs of an inherited IRA regarding when, how, and why prompt action should be taken by them.
The author of this guide has found that the heirs of the deceased IRA owner’s account are often clueless as to what the rules are from an IRS point of view and a legal point of view. This guide will point you in the right direction so that you can avoid tax penalties and tax traps regarding the inherited IRA rules. Instead, you can turn the tax and legal rules in your favor by knowing the rules—never guess, know.