estate planning

If you’ve contributed to a 401(k) or IRA throughout your career, you’ve probably accumulated a substantial nest egg. Then once you turn 59 ½ you can start withdrawing. And at 72 you must start withdrawing. Required Minimum Distributions (RMDs) will force you to draw down your account balance, but might not deplete it. No matter how much money is left in your account, you need to designate a beneficiary. If you did so more than a few years ago, there may be reasons to update your retirement account beneficiaries.

Maybe you designated a beneficiary when you first established your retirement account and haven’t looked at the paperwork since. During that time, you may have gotten married, divorced, had children, or become involved with a charity you would like to leave money to.

Even if you updated your will or set up trust, you need to update your retirement account beneficiary because beneficiary designations trump will and trust directives. For example, you may want to divide your IRA equally among your children, but only have the oldest one actually named as beneficiary because you forgot to make updates when your other children were born. This could result in a court battle.

To prevent a situation like this, you should review your beneficiary designation immediately after events like the birth or death of an intended beneficiary, marriage, and divorce. If you never designated a beneficiary, federal or state law may determine one after you pass away. For qualified plans such as 401(k)s, the automatic designation is the spouse of the account owner. If you are divorced, widowed, or have another beneficiary in mind, you should review your beneficiary designation. If you decide you want to leave your retirement account to a charity, make sure it’s a qualified charity and continues to operate as such.

Naming a beneficiary for your retirement account is important, but it isn’t the only thing to consider when estate planning for your loved ones. There are ways to minimize taxes for your heirs, stretch the amount of time they have to draw down an inherited IRA, and gift money to future heirs during your lifetime. At SHP Financial, we can help you create a comprehensive retirement plan that takes your estate and legacy planning needs into account. Click here to schedule a no cost, no obligation financial review with us.

The content presented is for informational purposes only and is not intended as offering financial, tax, or legal advice, and should not be considered a solicitation for the purchase or sale of any security. Some of the informational content presented was prepared and provided by tMedia, LLC, while other content presented may be from outside sources believed to be providing accurate information. Regardless of source no representations or warranties as to the completeness or accuracy of any information presented is implied. tMedia, LLC is not affiliated with the Advisor, Advisor’s RIA, Broker-Dealer, or any state or SEC registered investment advisory firm. Before making any decisions you should consult a tax or legal professional to discuss your personal situation.Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.
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