Last Updated:
 
  09/06/2014
 
 
Unlocked Content For Our "Registered" Guests

WELCOME BACK!

First, here is the White Paper Review our firm did regarding the landmark Supreme Court Ruling June 12th, 2014:

Supreme Court Changes Status of Inherited IRA Accounts

Is Uncle Sam's Hand on Your IRA Wallet?   READ M.D.'s UPDATE ON A POTENTIAL GOVERNMENT TAKEOVER OF YOUR 401-K OR IRA ACCOUNTS!

 

MD AndersonHi! I want to personally welcome you back to this extremely important emerging field of personal finance that has for the most part, been ignored. To date, the top Inherited IRA advisors in the country remain frustrated that more financial advisors can't understand the concepts better.

With the record death rates of the "Greatest Generation" hitting all time highs, it is especially sad to me as an advisor to have to see so many of my own senior clients pass on.

If you are an heir, the best way you can honor your loved one who left their IRA to you is to be diligent and wise on how you treat the money now. Just  like they did when they were alive. I am dedicated to helping you do that with vast knowledge and experience in this field of practice. My multi-licensing and connections with other top Inherited IRA advisors guarantees you will now be reading some of the best content on the subject in this "registered guest" section and for free! No tricks or obligations like other websites that never deliver what they promise.

Just remember that this information has to remain general in nature as each specific case my firm takes under a "client" retainer relationship has twists and turns that can not be known until all the facts are discovered.  Once the facts are known, one can just follow procedures with paperwork submission and follow up to transact a successful inherited IRA transfer. A caution is in order -- if you are a "do it yourselfer", run your final decisions by me or another qualified Inherited IRA consultant. The cost factors to do that are small. And, any mistake can be corrected BEFORE it is is made.

Those receiving an Inherited IRA account who want professional guidance from the onset can employ my services as well and you can continue to enjoy life, not having to make the hard decisions alone on inherited retirement funds. TRUST ME, even if you are a CPA or attorney as heir or representing your client for Inherited IRA funds, you should seriously seek my counsel or of another qualified Inherited IRA consultant or advisor.

Here's Why:

A prior case back in October 2012 I was retained on, had a release of procedures to heirs by two of the estate east coast assigned lawyers.  And two of the nine points were 100% wrong! 

Since hundreds of thousands of IRA dollars were involved, I was shocked to see the notations that the heirs can feel free to convert their shares into Roth IRA's, owing the tax but preserving the tax free benefits.  Also, the heirs were instructed that they can do an IRA rollover as long as they pay the money back in 60 days!  Sadly, though my client was warned in time that the LAWYERS had it all wrong on those two points (neither are allowed or possible without 100% reportable lump sum taxation), my guess is other heirs may have already trusted the faulty advice.

To serve your interests, I follow a proprietary grid of options and procedures that goes into much more detail to be sure nothing turns out badly with the death benefit payment and the registration of your new Inherited IRA account. Upon request, my service will give you a  written procedural steps guide with a check off system as each step is performed. 

Or, you can try to do it yourself and if that is the case, I am sure the information you find on this "inside" part of my website will help you in general terms.  You can always bring us in if it becomes too difficult. Just try to remember to do so BEFORE signing any forms you don't totally understand.

REMEMBER: YOU PROBABLY HAVE A HIGH CHANCE TO MAKE A MISTAKE THAT WILL COST EVEN MORE IN 2014 AND BEYOND IN REAL TAXES, SINCE TAX RATES ON "MISTAKES" ARE GOING UP ALONG WITH THE HIGHER TAX RATES NOW LOOMING!

So, am I telling you that this is an "impossible mission" if you try to do it all on your own?  No, but I am saying your odds of doing it 100% right are low without qualified help supporting or watching your steps.  (Hiring us is highly recommended)

Lastly, if you like the quality and depth of the concepts you are about to read and desire professional representation immediately, please give me a call on my direct toll free number below. Or, if you have a quick question, again, feel free to pick up the phone and give me a quick call at no obligation or cost.

1-800-782-2806

Or if your prefer, Email M.D. Anderson With Your Inherited IRA Question or Concern instead. You will not be billed for it -- I promise!!!

Sincerely,

M.D. Anderson Signature Guarantee
M.D. Anderson, President
Financial Strategies, Inc.


3 Important Notes Before You Begin:

IRA, Roth IRA, 401(k)1. No matter what kind of golden eggs you have qualified assets in right now, sooner or later they will become an IRA before you die. (If not originally an IRA) In case you were wondering, most IRS publications refer to the required minimum distributions as "RMD" and most non IRS sources refer to it as "MRD" or minimum required distributions.  I  went with the IRS version most common on this website, but please understand they both are acronyms for the same minimum money withdrawal action you must start and take out after you reach age 70 1/2, or for your heirs the year after you die if they properly set up "inherited IRA" type account's).

2. You are going to learn more here than most books that will just confuse you.  The inherited IRA field is the most complicated area of financial advisory so I have purposely tried to write in a format that will "spoon feed" you so you don't choke on the complicated subject matter you are about to read.  For some, you will notice the redundancy and I apologize for it.  It is intended for you to learn and "know" what you are doing if you try to do this on your own.  And, some will get confused just the same, but I must say, it doesn't get much simpler than what you are about to read. If you don't understand the content fully, let me be the first to say you should seek an outside (not associated with the deceased) advisor to help you! Obviously, I hope you choose me!

3. Sometimes, an additional inherited IRA advisor must be brought in for legal or tax issues that are beyond the scope of my advisory services. My firm is acknowledged and well respected in this field of professional advisory. I personally promise I will always inform you when a referral is required. FSI has made numerous referrals to other "IRA Experts" over a long history of operation. Our firm is also associated with Dr. Saul S. Gefter, a long term, popular International lawyer, and a member of  the D.C. bar. And, since we were recently referred to in Natalie B. Choate's Spring 2012 newsletter, we know she too is keeping an eye on our services and hopefully, will be available on some of those insanely complicated "trust as owner" cases that come up from time to time. We also have referred and worked with Roth IRA expert and Attorney Jim Lange who also is a CPA.

 
Inherited IRA -- Class 101

Greed & Incompetence the Norm

The Inherited IRA Hell I am talking about is completely avoidable if you take the right action BEFORE a big IRA owner dies. Before, you're fine. After, you could easily end up in Inherited IRA Hell as an heir. What is the hell? It is being stuck with needless federal and state income tax on your beneficial share of qualified funds (IRA, 401-k, TSA, etc.) left to you by your deceased loved one but indirectly since the death benefit must be paid first to their living trust!

This procedure is becoming more common, especially on larger IRA type accounts. Too bad, since it is a big mistake to leave any qualified funds to a Living Trust for most people and their situations, unless three complete things exist in harmony:

   1. The trust itself must be "qualified" per strict IRS guidelines to be an accepting vehicle.

   2. The advisors must understand ALL the options and do everything possible to help you "stretch" the monies left to you. And not cash them in which will cause immediate taxation. (If you hear "lump sum settlement" -- RUN!!! 

   3. Lastly, the custodian must be what we call, "Inherited IRA" friendly. That just means they have an inherited IRA department and staff that is dedicated to knowing current inherited IRA law and rules, as well as the ability to resource on all new updates that apply to this niche market.

Yet, I get a case almost every week with trust owned IRA proceeds and most of the time -- heirs that contact me feeling they have no choice other than what others are telling them they have to do. Sometimes, this scenario is due to your (or your relative's) current money advisors not being informed or experienced enough to give the professional advisory EVERY client deserves.

In other situations, sadly, it is because they are too greedy to ever help you avoid paying the high taxes due when a trust becomes a direct beneficiary of the qualified funds death payment payout! By telling you to take a lump sum, they try to influence you to "stay" with them and invest what is left over with them after the IRS and state tax authorities get done "reducing' the money down as much as 50%!

There is a much more common way you as an heir can end up in Inherited IRA Hell and it has nothing to do with beneficial death claim payments paid direct to the decedent's living trust. It does have everything to do with uneducated or incompetent financial advisors who will wrongly tell you that the IRA money has to be taxed, even if the situation is less complicated!

Since, 2001 when the IRS added some really neat features to IRA options after death, (obviously, of no real benefit to the deceased IRA owner) money advisors, accountants, financial planners and so called "estate planners" do not always get it right. Then the features and options you deserve as heir can either die with the IRA owner or not be presented to you as an heir after the death!

In fact, I would bet that the information you obtain on this free Inherited IRA (A.K.A. Beneficiary IRA) information website will cause you to blow a fuse if you find out more options, after the fact, then what your IRA advisor's told you were available to you regarding your share of an inherited IRA.  Especially if they have already caused full taxable income from your inherited IRA!

Malpractice and malfeasance in this area of financial advisory and practice is becoming legendary. In fact, if you are a law firm owner and reading this information site, I would give you the free gift of suggesting this new area of practice. You should do really well in this niche market, even if you start from scratch. This is because heirs are being mislead and victimized every day all around the country. If your law firm gets  up and running in Retirement Asset Malpractice suits, let us know so we can link to you!!! (And feed you some cases)


We Are Talking Big Bucks Here...

That is because an estimated 10-17 Trillion dollars in qualified funds* still remains "after" the 2008 market crash. All that money is now resting in the hands of both Baby Boomers and Mature Adults here in America! Let me say that a different way:

$ 10,000,000,000,000.00+*

* "Qualified funds" is an IRS term for ANY tax favored money that provides a retirement benefit to you and is under special rules. The opposite is "non-qualified" funds which do not get special tax treatment, but also are not restricted as far as when you can draw money out without a penalty, taxation, or both penalty and taxation at ordinary income tax rates. Prior to 2008 crash figures, this amount was estimated to be double this current figure or even higher.

Some will offer you fee based management, some will offer you commission based products, and some will offer you both. Roughly, 60% resides in variable accounts including equities and the other 40% in fixed account type investments in our country. Only about 2% of that variable account figure is invested in real estate. The main reason most lawyers, CPA's, and other financial planners don't suggest self directed IRA accounts is that it is out of their comfort zone. WE ARE ABOUT TO CHANGE THAT!  For more information, call us at 1-800-782-2806 for the latest on self directed IRA account investing.


Baby Boomer Bonanza or Bust?

Back on 12/28/10, the Boston Herald quoted that 10,000 baby boomers in 2011 will hit retirement age each day -- for the next 19 years! Adding in their own 401-k, SEP, 403(b) money with what they inherit from parents, the total sum for some families will be overwhelmingly the highest percentage of their estate assets!

What is important here is to note that too many advisors are just plain ignorant about the taxation issues! And, because they are not tax experts, and few are IRA experts (though some took a class that says they are), bad things are happening as this money comes out of the estate settlement process. Law firms farm accounting tasks out to CPA's on larger estates. Even CPA's have been sleepy, but they are waking up fast! Many read this information site and respond to me knowing they can count on the information we publish.

Instead of using the "S -- T -- R -- E -- T -- C -- H" IRA concept and investing in a new "Inherited IRA" account with the current or proposed account heir -- still too many money advisors often tell the heir after the death to pay taxes on the money and invest the rest with them! This can amount to a 40% cut for the IRS and state taxing authority and a 60% remaining cut for the new account owner. Many times, professional advisory isn't sought out and thus needless taxes are paid on these IRA transfers that often are very large  -- and Inherited IRA Hell stays very busy with new arrivals of victims every day!

O.K., boomers, I want to warn you of a pitfall. I didn't forget about those heavy weight advisors with years of experience who are running big ads in the paper and in magazines telling people they are best to sell out their IRA accounts. They feel you should pay the tax, and invest what is left with them in a product that doesn't allow a licensed agent to call.... an "investment". Maybe that's because it isn't one! 

The truth is these guys are usually just selling life insurance with high first year commissions and really don't understand the damage they are doing to their client. And, they ignore or are not wise enough to understand the concept of a potential perpetual increasing income stream on an increasing tax-deferred principal base for almost an entire lifetime. And another lifetime as well if you leave your IRA money to your kid/s.

Those advisors in a hurry to convince you that you should pay income tax on any kind of IRA or 401-k/403-b money, etc. -- might just be in a hurry to get some commissions out of you. The longer government standardized mortality tables (Newest is the 2001 CSO Mortality Tables) just made it even more lucrative to keep this money tax deferred all of your life and then let your children continue your "Inherited IRA" after you are done using it. Only foolish or uninformed advisors tell you to cash them in!


Can You Trust Your Current Custodian?

Short answer -- NO!  Since the field of Inherited IRA consulting started in 1998 after a favorable private letter ruling from the IRS, I have been active and have specialized in this field. Some now call me an expert. You can usually keep the money with the same investment firm (sometimes it has to be transferred out to avoid taxation) that your deceased loved one had it with. 

Or you can transfer the funds to another custodian or firm as long as they agree to receive the funds based on circumstances (Inherited IRA funds paid to a trust are extremely limited to who will take them, or keep them - without forcing restrictions and limits on you)  

For Example:  Both J.P. Morgan Brokerage & Schwab will not allow new Inherited IRA money inside a trust, if division amongst the beneficiaries is desired !!! 

A recent case with J.P. Morgan further restricted trust owned Inherited IRA RMD's to the decedent's age! (Top Inherited IRA Lawyer & Expert Natalie B. Choate would call that a "Tragic" misunderstanding of IRS policy and law.)


Flight To Safety, Path of Pain, or more Unbelievable Gains?

Since some investors missed the recent "return" on stock market investments by sitting safely in cash reserves, the possible new flight to safety may start quickly if the stock market continues to keep rising and setting new record highs.  (written last week of May 2014)

All the gains might go south quickly again if things get out of hand in world markets. 2014 will be a year of challenge to maintain those higher values most likely based on predictors and analysts mostly agreeing the market is due for a major correction. 

Another crash this close to the 2008 situation may trigger a flight to "hard assets" if something really scary takes place next. Like a nuke being used somewhere in the world.  Investing in hard assets such as REAL real estate properties with current IRA dollars makes a lot of sense for those currently sitting on the sidelines or looking to get out of stock market positions now.

Buying low and selling high works well in both securities and with real estate used for investment purposes. One thing is for sure, no one is going to watch their purchasing power sink to near zero without trying to do something about it. (Inflated currency values is a great way to watch you hard earned IRA funds and any other money accounts -- sink down, down, down a path of pain that so many around the world have experienced in devaluation of currencies) Just because the dollar devalues slowly, doesn't mean your purchasing power hasn't been hurt. it's like a small hole in pocket...

Of course, the main importance right now is to allow YOU to find an advisor who understands what they are doing and... who they are doing it for. And, an advisor who knows the specific companies who will be willing to receive your new "Inherited IRA" account funds and take care of you the best way possible.

In other words, he or she knows from experience which companies are best suited for your needs and is trained and experienced to handle these accounts. Since advisors and firms  are not fully up to speed in this extremely complicated area of finance, you will need to shop for more than just the best "rate".

Yet, like so many times in real cases, you can also use my firm to help your current advisors regarding your Inherited IRA funds that may now need attention. However, if you can't get your current financial advisors to perform in this hardest of all areas of finance -- give me a call.

Hey, Don't Accountants & Lawyers Fix These Things?
Inherited or Beneficiary IRA.Yes and no. Yes, they can usually stop the needless taxation if they are consulted early and if they practice in this area. But, no, they usually don't get asked to help until it is too late.

Hint: Once the IRA money is on fire, it is too late!

You see, many times, the existing investment advisor/agent/consultant/banker may be good at picking stocks and bad at understanding tax issues and their implications. And, many don't want to lose control, so they tell you the money you inherited has to be taxed!

This lack of knowledge, lack of caring, or outright abandonment of normal due diligence creates huge problems as well because outside accounting and legal advisors get "bumped" from ever being in on the discussion until it is too late. When is it too late? When the check is cashed according to strict IRS rules! Only Inherited IRA Hell awaits after that...

 

Inherited IRA Truths That May Be Too Hot To Handle By Your Current Advisors & Custodians
 

A.  If you ever get your physical hands on the money*, you have just entered INHERITED IRA HELL!

Rescue Your IRA Dollars from Inherited IRA Hell.By now, you most likely have figured it out. There are two types of IRA money advisors. Those that get it right. And, those who don't.

The first will keep you out of Inherited IRA hell. The latter has or will put you in there. Once there, your options are limited to taking legal action for any chance of financial recovery. The only tax write off is your state income taxes you paid on the taxable distribution, if you itemize on your IRS 1040! (And perhaps your tax and legal fees)

It is a hard fact that the IRS and your state tax authority (when applicable) will not give back your money. And the institution caused the mandatory taxation of the inherited IRA will not and can not reinstate the account after the fact. Once the check is cashed. It is set in stone!  (many ask this question, knowing pretty well what the answer is!)

Now, occasionally, a firm may register your new inherited IRA and forget to include the name of the deceased IRA owner who left your share to you.  These situations have been modified by the firm in those cases and most likely, the IRS is never aware of the mistake.  (Normally the IRS allows some leeway in the year of the mistake. Of course, we know some institutions mess the account titling up and don't correct it in the same year it happened. That most likely constitutes "constructive receipt" and if the IRS finds out-- they will want to tax the funds)  So, I personally recommend you have an expert read and review the paperwork before you sign it if you try to do this alone.

In cases of constructive receipt, regardless of how it happened -- you could try to file and hope for a favorable IRS "private letter ruling", but the truth is that the IRS is not in the business of feeling sorry for stupid mistakes made by administration departments of financial institutions and their employees or staff. Or by you as an ordinary tax paying U.S. citizen!

When an IRA is payable to a trust, there may be room for a PLR from the IRS, to correct mistakes or language to manage the money that is often found "missing" in our client cases. But again circumstances need to stand between simple administration mistakes and arguable grounds in special cases that contain extenuating circumstances. Only the latter is worth paying the high fee and waiting for a hopefully - favorable answer in filing a PLR with the IRS.

* Otherwise known by the IRS as "constructive receipt"

B.  Not Every Advisor is Qualified in This Specialty Area of Practice!

Many financial advisors are not any good after an IRA owner dies.Your current financial advisor might be worried right now if you ask him or her straight out --  how to avoid paying any upfront income tax on your inherited IRA account. They are worried because most don't really specialize in this area and therefore are prone to tell you it would be best to just pay the taxes on the money.

It is malpractice and any smart lawyer will be testing the limits of the advisor's E&O liability coverage if it is later discovered by the client that there were more options than what was offered to you.

I'm not speaking in theory but in actual practice. In fact, a few years ago one of my clients was told by a Phoenix financial planner that his deceased father's large IRA account  had just one option -- the heirs would have to pay the tax and then reinvest what was left with him. Now, this case did involve a trust as the beneficiary, so it was a complicated matter. (But not for us)

My firm did the research and found the needed tax code elements in the fathers' trust to authorize account transfers according to the IRS rules. I helped find the way to conduct the tax free transfers and then assisted in the "drop down" re-titling to the trust beneficiaries under "look through" provisions in the code. When it was all done, I assisted the client so they cold perform the "drop down and out of trust" procedure on the accounts. This allowed us to fully close the living trust altogether, and thus, comply with the trust termination provisions! We continue to repeat these procedures for clientele since then, trust case, after trust case that comes in.

Sure, it is extremely complicated. And that is the very reason you should do full research before you authorize anything! At the very least, you have until December 31st of the year after the death, as long as you don't do anything quickly with the original account your loved one had his or her IRA in! (But if the IRA funds are payable to a trust, don't wait until then to start. Important reporting requirements start as soon as Sept. 30th, the year after death)

Can you imagine the extra earnings and principal growth for about 40 years on the instant $120,000+ I saved the client case I mentioned? Especially when the current advisor had told them to give it away to the IRS and state of Arizona tax departments? Your case could be similar, so please don't dismiss the need for a second opinion.

This story from a few years ago had an interesting and unusual ending. I had to call the advisor mentioned to get some details on the case up front and was verbally abused by him over the phone. He called me a "bean counter" and told me to stick to counting beans and said I should not try to tell people what to do with their money. (I wasn't) He bolstered himself as an investment advisor professional and warned me that accountants like me should not butt in on his advisory services.

After the case was completed and the transfers and re-titling was done, I noticed a large ad in the Arizona Republic newspaper about two months later. The investment advisor was prominently promoting his merger with a CPA firm in Phoenix and introduced a brand new company! I didn't care to call for the details, but I can easily surmise that he got educated real quick in this case he lost control of and was never going to let it happen again! (RIA's hate to loose MUM $ (money under management) even when you die!

In other words, if you are a qualified advisor lacking in the ability to interpret these complicated tax issues, why create liability in guessing? I welcome your referral and would be more than happy to work with you. And, if you can team up with a good CPA or tax attorney in your own home area, don't ignore the possibilities as well in doing so. Just don't tell your client who just inherited an IRA that they have no option other than to pay tax on the money, unless you are 100% sure that IS the only option!

C.  Not Every Institution is Qualified Either in This Specialty Area of Practice!

Frustrated IRA advisor.It may very well be best to leave the money with the current institution that your deceased IRA owner had the money in. But, if that institution your heir had his or her money in is talking about the need to "distribute the money to you", this means full income taxation! In that case, you most likely need help in finding a new home! Stall them and remind them you have until the end of the next year after the death before you HAVE TO do something!

Also, if the current firm sells stocks and you like fixed assets for safety sake, you may need a new home as well. And the opposite may also be true of course. Too many times I see an heir take over an account at a brokerage firm that they inherited and never question what the money is invested in. Many times, a change of portfolio structure is needed, if not a full change in brokerage firm or other fiduciary institution home that is now holding the inherited IRA funds of the deceased. (Your broker should instantly offer a new suitability review or form to you in your first meeting. If not, find a new broker...)

And yes, you can move the money tax-free wherever you want in almost every case, you just can not take constructive receipt of the funds when it comes to an inherited IRA! There are no 60 day roll-overs allowed in this case, such as you have with a regular or traditional IRA account. SINCE AN IRS APPROVED ENROLLED AGENT CONTRADICTED ME IN A RECENT NATIONAL PUBLICATION INTERVIEW, I REPEAT: NO 60 DAY ROLL OVERS!!!  (He obviously is no Inherited IRA expert)

You can re-register the account as an inherited IRA, maintaining the name of the deceased owner on the account while you decide just where you really want to keep the funds. Well, this is mostly true. Lately, we have to "wrestle" with a few custodians to force them, (help them?) pay the death claim while still maintaining liquidity options so the money isn't tied up or hit with surrender or sales charges if or when you want to direct transfer it elsewhere.

Or, you can decide now -- the permanent home of your new funds during the allowed time and then make the "trustee to trustee" transfer required to keep the funds tax deferred as new Inherited IRA accounts. Either way is fine as the first step. Additional account management is of course required, including determining when the mandatory RMD (required minimum distributions) must begin in order to avoid penalty from the IRS.

A word of caution: If your deceased heir was over age 701/2 and had not yet received his or her required distributions in the year of death, you really will need to consult with an Inherited IRA expert or at least an accountant or CPA to be able to get this matter taken care of before any possible transfers are anticipated. The institution normally will catch this detail, but keep watchful eyes on them to be sure they DO Distribute the deceased heirs' RMD prior to your trustee to trustee transfer request being given to them. Or, if you leave the funds with them, before you re-title assets with the same IRA custodian.  

Basically, any institution that transfers your inherited IRA without fully paying out 100% of the yearly RMD prior to the transfer to the listed beneficiaries, causes problems upon themselves and problems for you too as the new heir and owner of the account.  BE SURE YOU HAVE WRITTEN PROOF AND CHECK THE MORTALITY TABLES BEFORE AUTHORIZING ANY TRANSFERS OUT!  (For multiple accounts, contrary to what you might be told, the IRS doesn't care which account you pull RMD out of...as long as you get 100% of the minimum out the year you inherited the account)

And for any IRA owner required to distribute the RMD each year, failing to take proper RMD's ON TIME has a big penalty! That penalty is a whopping 50% of what you should have taken out!  So again, choosing the wrong trustee or custodian in this area is not only expensive, but also a huge hassle if that money institution doesn't comply with strict IRS reporting guidelines. Or fails to notify you of important distribution options on time, before penalty situations exist. A current client case with a Metropolitan Life IRA proved their mistake in telling the beneficiary he had 5 years to pull money out (not true if over age 70.5). That situation could now cost him 50% of his missed RMD's, since it was discovered 3 years after the death! (They gave me an email saying nothing was reported to the IRS yet...)

In this area of work, don't assume anything! Improper training in many institutions, especially small firms, can cause disastrous results and put the money in Inherited IRA Hell automatically before you even have a chance to object. Papers can be put in front of you to sign. And, if wrong, they guarantee your money is going into the Inherited IRA Hell tax pit! Sadly,  some of our biggest goofs equally come from name brand firms, so the short list of "Inherited IRA Hell friendly" custodians remains very, very short! (Ask us and we will tell you)

In many cases, relying on the institution alone for your tax advisory is not a good policy, and they will tell you up front they can't give you legal or tax advisory. (THIS IS A POINT YOU REALLY SHOULD WRITE DOWN!)

Remember, the institution lawyers will include disclaimers in your account agreement that inform you to get qualified legal or tax advice, if you need it. (YOU MOST LIKELY DO) In other words, they will state they aren't in that business! Don't ignore those disclaimers.

Plenty of inherent liability exists with any institution who advertises or agrees to take over the custodianship of ANY Inherited IRA account...so, they can disclaim the liability all they want.  By their very act of receiving your funds and holding them -- they share the risk and penalty for failing to follow IRS codes, rules and general common contract law, just the same. Though every custodial account will insert "hold harmless" language, it isn't fool proof when MALPRACTICE develops.

Also, special problems may happen often on all IRA's that require RMD , which are split between two or more institutions. Multiple institutions as your money Trustees have no way to communicate to get the RMD calculations correct for you. (Privacy Act Laws apply)

Even though it doesn't matter which account you draw your RMD from each year, you or someone you trust for accounting purposes should figure the RMD for you which is always going to be based on the closing values of the prior account year. (December 31st values determine RMD) All you need is the current IRS published tables that spell out your life expectancy!  Software is also available, some for free online, that will give you these required figures.

If you engage my firm for paid professional services, I will promise to give free RMD calculations for the life of your retained account.  

I do think that the size of the trustee should be very large to assure you that they are doing plenty of Inherited IRA account business and therefore are very experienced. And, that normally means they have the best database software and compliance software as well so "stupid" mistakes don't take place. Placing your money with a small firm could expose you to less than stellar management and service practices.  Any firm may have good expertise on this subject, but give poor or slow service.  The right firm should be smart about this type of specialty account and be known for great service as well!

And, of course, I think that the firm you choose, or firms in many cases (you usually can split out and divide your Inherited IRA without taxation, in case you were wondering) should be highly rated by rating companies to assure you that your money is safe. Safety of the firm always mattered. After the financial crisis of 2008, it is paramount!

And, I think that the institution you choose should openly tailor their services to handling Inherited IRA accounts. That would constitute the minimum requirements I would look for when or if you are now shopping for a new home for your Inherited IRA account.

But, with that said, I have to tell you a story. About 14 years ago, I went with a brokerage firm that advertised everything I just mentioned. They declared themselves the experts when this area of practice was first born around 1998 and 1999 here in the U.S.

The end result is that a con man was discovered as the head of the entire "Stretch IRA" department of the firm and was instantly fired when the parent company found out! (Guess who told them?) The company could not administer the large amount of business I placed with them to save their lives! In other words, they were imposters! Legal remedy was sought and obtained in private settlement for clients who were hurt by their false advertising.

So, when you go shopping, be careful who you deal with today...not everyone -- IS who they say they are! (or is an "expert" just because they say they are).

TIP: When you get the exact same advice from two unrelated advisors, chances are much higher you are getting GREAT advice!

 

Inherited IRA Management Concepts That Need To Be Practiced To Assure Long Life!

(Of Your Account That Is!)

Once You Avoid First Year Taxation, Proper Management Begins. And, It Never Can End!

Life never stops.Now wait, before you think about just paying the tax and being done with it -- it isn't that big of a deal to learn and practice proper Inherited IRA management. Especially if you find an IRA expert that is around your age or younger to be able to help you many years into the future whenever laws or circumstances change. This tether to an advisor could cost a little in advisory fees, but as you are about to learn, the true secret of why management is so important is coming up next.

If you live to 103, where will your money be? With you yet.... or long gone? Planning for lifetime income from your Inherited IRA should be done right now. They say the difference between an old man and a gentleman, is just a few bucks in his pocket! It is true, and you need to set you and even your survivors up for life! (Or at least keep your Uncle Sam at bay as many years as possible here)

You are about to learn why a stretch Inherited IRA is just about the hottest ticket you can hold to family wealth in the case of large Inherited IRA accounts. Once set up with the right advisor and the right trustee (institution/custodian), proper management secrets can all but guarantee success!

At this point, I assume you have figured out you are not in Inherited IRA Hell, at least not yet. If you are close, you won't be the first I have helped pull back from the flames licking at them!

But, if you think you ARE in Inherited IRA Hell, you probably are now calling your attorney. Or, crying a lot at the very least. Just don't forget to let me know the situation too. Sometimes people and/or their advisors misconstrue the deadlines and the rules and still cause themselves needless stress or eventual taxation. As long as the check isn't cashed, I would almost be willing to bet you still have some wiggle room...


CONCEPT # 1: Drawing Down Principal In The Early or Mid Years of the Account Would Be a Grave Mistake!

Watch your IRA like your Matt Dillon!O.K., I admit, I grew up watching Gunsmoke on TV and if any man knew when it was the right time to draw out his gun, it was Marshall Dillon! Well, I want to use Matt as the mental picture you must imprint in your mind about how and when to draw money out of your new Inherited IRA. Your inherited IRA withdrawals should only be pulled out when you desperately need them.  (beyond RMD)

You won't be disappointed because this truth is the most important on how to handle a large Inherited IRA once you have avoided all the mine fields up to this point. This is where the wagon wheel hits the road. And, the concepts of this truth are very, very simple.

Warning:  If you just re-titled your inherited IRA account and find your  deceased owners' name is not on your new account, (if your new institution or account removed the original IRA owners' name, you are are very close to being in Inherited IRA Hell -- be sure the deceased name is put back on!), you need to get that changed right away, before they report it to the IRS at the end of the year!

Now, the truth concept so important in the management of you new account:

DON'T EVER REDUCE THE PRINCIPAL YOU RECEIVED!

You now have complete and total control of the funds. And, you are ready for this truth. Said another way, "don't cut off the hand that feeds you". The minute you begin to deplete principal, your days of ever increasing income on an ever increasing principal base are numbered! So, if you have all or part of your Inherited IRA in a fixed bank or insurance annuity account, just don't ever pull out anything but interest earnings! And, if you can, delay taking any more than the RMD's for as many years as possible to try and let the account(s) grow.

Obviously on low earnings accounts (both fixed and variable), RMD can deplete principal.  But, you always have the option to shop around for better rates or terms to get the performance up so principal can remain in tact or better yet -- grow with interest earned above the annual RMD withdrawals.


CONCEPT # 2: Make This No-No on a Securities Account and Watch Your Retirement Income Die Long Before You Do!

RIP for your IRAThis concept is kind of a continuation of the first, but it applies only to variable type accounts. Namely, you have to adjust for losses drastically or the loss, especially incurred early on while paying out retirement income, will destroy the very "money tree" that can otherwise feed lifetime income to you and your own named beneficiaries of your inherited IRA account.

Failure in this area can commence any year values drop, yet many advisors and their clients remain unaware and don't adjust.  But it may be early enough to catch the mistake before it gets too serious to stop, in your specific case. This whole field of specialized Inherited IRA advisory is still new and emerging so there isn't a big rule book on actual practice you can seek out and find easily.  (If I write one some day - would you buy it?)

Your grandfather and great grandfather knew the concept real well! You don't spend more than you make while you are earning a living. And, you don't spend more than you earn in interest and dividends, once you retire! Failure to adhere to this -- the oldest and wisest of money concepts spells early death of the account!  (Maybe the U.S. Government should be reminded too)

I am going to show a chilling example so you can grasp this one at full value. If this shakes you up and maybe wakes you up as much as it did me, I would declare that your time has been well spent reading my free information!

In this example, the client has retired on a $100,000 nest egg Inherited IRA (could be any kind of account as well) that avoided immediate taxation because of having a smart money advisor. His money is in a brokerage account averaging 12% a year for a 10 year period and the client is taking out an annual 12% withdrawal for retirement income or combined RMD and additional retirement income purposes.

The question is this: How much money would the client have in this Inherited IRA at the end of 10 years?

THE ANSWER IS: $40,641!!!

I'm sure your answer may very well be the same as mine was, when this example was proposed to me. I answered "$100,000!!! After all, for those of us from IOWA that learned that good ol' mental math so well -- it is the only logical answer!

But, in this example, it is very wrong! You see, one little detail was left out. I didn't yet tell you that in the first year of the $12,000 withdrawals, an average loss in the portfolio occurred in the amount of -10.5%.

Here is what actually happens when an advisor wrongly assumes you need to use an "accumulation" portfolio strategy when in fact you may very well need a "guaranteed or partially guaranteed income" portfolio strategy:

Inherited IRA RMD Table

This chart shows that a single loss in the first year -- even with nine consecutive years of double-digit gains--causes a loss off nearly 60 percent of that $100,000 original Inherited IRA account you inherited!

In a typical "long-term" investment time frame (cycle) of 10 years, you could easily expect another year with a loss. Even without any more loss in this example, your payments would stop in just 4 more years and the account would go bust!

It is easy to surmise that your Inherited IRA will die way before the 30 or 40 years it normally would last, if you are not wise about what you invest in, and do not take special care in preserving the capital so that it can keep on producing income!

Clearly, the accumulation logic so commonly practiced while you put aside retirement assets will not work in the distribution phase of your retirement years. While the rules for accumulation focus on dollar-cost-averaging, and tax-deferred growth, the economic attributes of the distribution phase are: guaranteed income streams, longevity risk management, upside growth opportunity, downside protection for life, and principal protection (preservation). I repeat that last rule. PRINCIPAL PROTECTION!!!

Send your advisor to this site if you have to, to remind them "why" you don't want your IRA invested where the chance of loss is very high. Or, at least adjust what you take out so you never deplete the principal. Or, if you live in Arizona or Iowa, (we also license in new states when clients ask us to assist them in investing in fixed annuity contracts), call me toll free at 1-800-782-2806 to discuss some refreshing options that offer stock market type returns and guarantee NO PRINCIPAL loss by using fixed indexed annuities!

Or, just visit my website: www.annuitymenu.com, if you like.


CONCEPT # 3: What You Invest Your Inherited IRA Money In Matters Greatly as Well as Who You Invest It With!

An Inherited IRA is a cash cow.Your Inherited IRA is a cash cow! To keep it producing income for life, and even the life of those children or grandchildren that survive you, you have to pick carefully how you invest the money.

What you decide to invest in matters. One area that I am convinced is a good area, is in real estate. Now, before you judge me, let me say I have an Arizona real estate license. I am also a Realtor® and am a member of local, State and National Real Estate Associations. I serve on an advisory council for a national senior advisory publication. I have to take more continued education courses than anybody I know to keep up to date in the multiple financial services (licensed) that I practice in. And lastly, I have practiced in financial services and planning for over 36 years! So, I DO understand the funding vehicle of "real estate" as a possible choice for your IRA.  

What I am talking about is a self-directed type IRA account. They are not for everybody. But, they are popular and custodial firms are now receiving millions of dollars in funding so clients can go out and buy "local" real estate properties in their own IRA accounts.

It's true, an IRS rule prevents you from depositing "new" money for project expenses unless they are qualified deposits into the IRA for tax purposes. And another rule says you can not have any "self-dealing" which just means your self-directed plan can not benefit you and your circle of relatives related to you. s a zero "basis" computation!

Real estate is a fine investment in the right context. Modern financial advisors serving their client's best interests first, now see real estate as a good home for diversification purposes. Few real estate ventures work out very well when the owner is removed from the day to day management of the project but with a self-directed plan, IRA owners can keep their eye on what they invest in, sometimes literally. One can buy a rental property on their own block with their IRA and drive by it every night when they come home from work!

Caution is needed to use IRA consultants before investing any money into a self-directed IRA account no matter how attractive it may look. Getting it wrong can cause up to a 100% tax penalty!  My firm is available on retainer to review any proposal others may give you for this, or to help you if you are researching self-directed IRA investing into real estate at this time.


CONCEPT # 4: Something Drastic Happened, and Most Money Advisors Are Still Asleep! Why Your Inherited IRA May Need Guaranteed Income Planning!

Many IRA Advisors are asleep!In the past, advisors and consumers alike were motivated to buy investment products that could accumulate money for their eventual retirement. The concepts were always that if you have enough principal by the time you reach a pre-determined retirement date, you would also have enough interest earnings as well to pay retirement un-earned income to yourself, along with any pensions and social security benefits.

The idea of a guaranteed income was not a preliminary planning concept or at least it always seemed to get overridden with "accumulation" planning. This of course meant that the products offered to you as the investor in the past had great accumulation potential and features -- but was severely lacking in any kind of guaranteed options. So you or your survivors could be reasonably assured a monthly income check would never stop coming!

Well, the baby boom generation changed that once and for all. This generation does not have the guaranteed pension income their fathers had. They have their 401-k, which is mostly their own money. And, after 2008, those accounts have been "back dated" in values have they not? Recent recovery of lost values could once again take a plunge, since may brokers are astonished a major correction has not taken place yet. (This was written May, 2012).

Baby boomers don't have as much in accumulated assets as their parents had, and they very likely still owe money on their home, even if they are now nearing retirement. And sadly, credit cards in their wallets stay a lot more active compared to their parents, who rarely would carry a credit card balance. (or even posses the card) So, many boomers will carry those negatives right into their retirements!

Of course, the average baby boomer inheritance from their parent will be a nice "catch-up" money dump for many who did not do as well financially as their parents. But not everyone can count on that, even if their parents or parent have a sizeable estate. Nursing care and last illness expense costs can easily deplete a children's inheritance before the parent dies. (and occasionally, the new "spouse" if widowers or widows remarry)

So baby boomers should and must plan for the most part  -- in putting together a solid retirement package on their own. They need to get out of debt. And, they need to find better guaranteed sources for retirement income that will not stop producing retirement money -- no matter what! Money trees need watering (upkeep) to keep producing. Fail to manage your money tree during retirement years -- and most likely -- it will manage to fail in your absence, sooner then you might think.

Income planning is even more important when you factor in the larger medical costs seniors have to pay out of their pockets and the higher cost of living we all must pay just to maintain our private residence. Yes, future income needs of baby boomers looking at retirement in the near future are a real and present need that can no longer be ignored by them or their financial advisors! Guaranteed options you can't outlive are now available by using fixed annuity contracts.  I can tell you more about that and give you a quote if you want one, later, once you properly review your inherited IRA options first. (coming up next)


FINAL CONCEPT # 5: Follow The Rules!

Note: These will include a mix of the concepts I covered on this site along with other important information you need to know. They do not address spousal rollovers which are wrongly classified in the press sometimes as being an inherited IRA.  To be technically correct, please note that only non-spousal beneficiaries create the inherited IRA under IRS rules.   And, that's why you are here... right?

YOU EITHER WANT TO PROTECT YOUR IRA FUNDS WHILE STILL ALIVE - OR AFTER AS A BENEFICIARY OF A LOVED ONE'S PLAN WHO HAS RECENTLY PASSED AWAY.


10 Rules You Must Know and Abide By

From M.D. Anderson, AZCLDP, Accountant

Rules for Inherited IRA

Rule # 1:  Cross Check the Facts

It is best to understand that the information you receive from the institution that is custodian of the deceased IRA account is probably wrong!  Seek another opinion from another qualified professional independent of the firm just to be sure you get the facts right before you begin. (and accept their explanation of options and terms or sign any paperwork)

Rule # 2:  Register the New Account Properly

Note: Multiple beneficiaries holding the same account would be in the "plural" for registration purposes. Also, note the words "Inherited" or "Beneficiary" are commonly placed in front of the word "IRA", depending on the firm. Trust registrations are more complicated and are not produced here for that reason.  Registrations are commonly truncated due to database limitations of institutional firms.  The IRS fully supports any truncation as long as it is reasonably possible to still determine the account title name.

Examples of non-trust proper titles for Inherited IRA's will vary with the different institutions who hold the money or who you transfer the money to.  All of these would be options acceptable by IRS standards depending on which firm you are with (or go to):

"IRA FBO Fred Jones as beneficiary of John Jones"

"IRA FBO Fred Jones (Beneficiary) of John Jones (Deceased)"

"Decedent IRA FBO Fred Jones, beneficiary of John Jones."

"Inherited IRA... "

"Beneficiary IRA... "
 

Truncated Sample:  "IRA FBO F. Jones (Ben.); of J. Jones (Dec.)"

Tip:  Never let the decedent's name be removed!

Rule # 3: Transfer Your Inherited IRA to a More Beneficiary-friendly Custodian if you Have Problems

If you inherit an IRA that is held with a custodian or trustee that does not allow you to stretch distributions under the options provided by the tax code,  you can usually transfer the inherited IRA to a custodian or trustee that does.

Try to complete the transfer before Dec. 31 of the year that follows the year in which the IRA owner dies, so that you can make any required elections under the new IRA agreement.  Always move the money via a trustee-to-trustee transfer. 

Normally, only 401-k accounts which recently became eligible for inherited IRS status are sometimes restricted by the trustee on whether non taxable transfers are allowed. Sometimes, the "agreement" with the company may restrict these, not a good thing for you because it moves you to the brink of my trademark "Inherited IRA Hell" status I talk so much about!  If that is the case, some will even restrict your chance to move the money elsewhere. 

TIP:  If you discover funds taken in a lump sum from a frozen 401-k plan, before your loved one died (and in the same year), check with my firm to see if special IRS 10 year averaging applies on the distribution you receive as well as special capital gains tax rates for any pre 1974 contributions made. This option may also apply to you as a beneficiary inheriting the IRA, but specific checks must be performed to determine your eligibility.

If 10 year averaging doesn't apply or causes a higher tax bill to settle up with the IRS all in one year (which is caused by a required 100% lump sum distribution), you may still be eligible for a 5 year payout to reduce the big bite of taxes on a lump sum distribution. (applies only if decedent died before reaching age 70.5)  The facts of your case must be known by a professional inherited IRA advisor before options can be fully known that apply to YOUR situation.

Rule # 4: Excluding the Decedent's Name from the Registration does not Necessarily Make the Amount Taxable

I already covered this, but it is important to make it a rule as well. Contrary to popular belief, transferring the assets into your own non-inherited IRA account does not necessarily result in the amount being taxable. It's true that the IRS requires the inherited IRA to be registered in the combined names of the decedent and the beneficiary. However, if the assets were transferred into an IRA in just the beneficiary's name, that can be easily corrected as long as the funds are not commingled with non-inherited-IRA assets. 

In other words, if you transfer it into a non-inherited IRA account that was already funded, it is too late and you are in Inherited IRA Hell by default most likely. As long as it was a new account that wrongly forgot to include the name of the decedent, the correction can be accomplished by simply adding the name of the decedent to the registration by the firm. Be sure to have this done before they have to report the status to the IRS by the end of the calendar year. Under federal mandated tax statutes that apply, automatic account reporting has been required since the late 1990's. 

Rule # 5:  Distributions from Inherited IRAs are not Subject to the 10% IRS Penalty

Distributions from inherited IRAs are not subject to the 10% early distribution penalty, regardless of the age of the beneficiary at the time the distribution occurs.  Also, to be sure no penalty happens, the IRA custodian or trustee should code or flag the inherited IRA, so that distributions are reported as "death distributions" with a code 4 in Box 7 of IRS Form 1099-R.  Without that exact coding, there is trouble that has to be corrected to avoid the 10% penalty if you are under 59 1/2 in age!

Rule # 6: Super Stretch Your Inherited or Traditional IRA!

This rule applies to all types of IRAs as long as certain circumstances are present. But, I will just address your new Inherited IRA account here. Once you have your inherited IRA at a beneficiary-friendly custodian or trustee, I suggest you use the IRS "life expectancy" payout if at all possible. That payout option will let you stretch the distributions from the inherited IRA account over your lifetime. And, in some cases, the lifetime of your children and even your grandchildren.

Rule # 7: Watch the RMD IRS Requirements and Trustee Rules

Your inherited IRA trustee doesn't always allow what the tax code and the IRS allow. The tax code and IRS regulations allow the beneficiary two sets of distribution options for inherited IRAs:

1. If the IRA owner dies before the required beginning date (RBD), for required minimum distributions (RMD) -- the beneficiary can distribute the assets within five years of the owner's death, or over the beneficiary's single life expectancy. (A premature death of an IRA owner would always be a safe bet - take the remaining life expectancy - and don't let someone convince you that only 5 years are available to you for withdrawal.)

2. If the IRA owner dies on or after the required beginning date, the beneficiary can distribute the assets over the longer of the remaining life expectancy of the decedent or the life expectancy of the beneficiary under the IRS statutes.  (Multiple beneficiaries on the same account will trigger the life expectancy to be used for all beneficiaries for the OLDEST beneficiary and is not a preferred way to hold an inherited IRA.)

The problem is that not all IRA agreements (offered by the trustee) allow these options.  In fact, it is quite surprising just how limited some trustee agreements are.  In April, 2012, our firm has discovered a brokerage firm that had to create inherited IRA paperwork, just to pay the death claim for our retained client. Custodians can force you to take a distribution within one year of the original owner's death if you don't challenge them. (We provide the legal referrals to do that) (This was even covered in a Wall Street Journal interview done April 2012 by Mr. Anderson)

Also, you have to be careful if the original IRA owner (the decedent) was required to take a distribution in the year of death and didn't. Then the beneficiary must take it before any re-registrations of the inherited IRA account (or transfers) takes place. (Insurance agents also call this the "death claim" filing or process)

To be sure you are informed on tax law regarding IRA's, you can find the rules about distributions in IRS Publication 590.

Tip:  It is smart to check this stuff out BEFORE signing paperwork!  If you don't like the terms, go back to the # 3 rule above! But hire us to assist you as the process is onerous. And dangerous without professional guidance each step of the way!  (Inherited IRA Hell awaits those that fail to abide by this rule more often then you might think)

Rule # 8:  Inherited IRAs Cannot Be Commingled

Be sure you keep any inherited IRA funds separate from your own. You are not allowed to combine inherited IRAs of different types. For instance, you cannot combine a traditional inherited IRA and a Roth inherited IRA, even if they were both inherited from the same person.

Also, if you inherit multiple IRAs from the same person you can combine those IRAs into one inherited IRA account.  But, you cannot combine assets inherited from different individuals into the same inherited IRA account.

Rule # 9:  Don't Try a 60 Day Rollover

Remember there is no 60 day rollover period since there is no constructive receipt of the funds.  With Traditional or Roth IRA's you may own, you can take a distribution out and put it back into the account as long as you do so in a 60 day time period. 

Using the IRS 60 day rollover procedure for short term expenses perhaps, the IRS allows you to avoid taxation and penalty. Try this with an Inherited IRA and there is a 100% chance the IRS will tax it.  (And the IRS will also know about it because the institution by federal law must report end of year value and status directly to them!)

I previously mentioned a financial reporter told me she was told by an IRS enrolled agent that YOU CAN use the 60 day rollover provisions on inherited funds.  I hope he has good E&O insurance...  


Rule # 10: Maintain Proper Beneficiary Elections on Your Account

The beneficiary form on an IRA is the first and most important part of receiving the death benefit payout from an inherited IRA.  If your loved one failed to name a "living and well" beneficiary on their own beneficiary form the "stretch" concept I discussed most likely will not be possible. I will assume for this rule, that they did name you properly as one of the beneficiaries, or as the sole beneficiary. 

Note: We can suggest ways to customize your beneficiary form, perhaps adding some important legal language that further protects who gets what when you pass away. This is done as a licensed and certified document preparer (In the State of Arizona) and we must be assigned as a "paralegal" to your legal representative to perform this service for you, if you are not a resident of Arizona. We must consult directly with your legal professional in your state. (FSI is not a law firm, nor do we practice law. Instead, we refer legal questions and needs to some of the best Inherited IRA professionals in the United States. Actually, they are the book writers -- and are the best!!!)

After becoming the owner of an inherited IRA, you have to think about how that account fits into your own estate plan and financial matrix. Deaths, divorces, remarriages or the birth of children are reasons to re-evaluate who the beneficiaries are on your inherited IRA account as time marches on. And to consider the legal protection afforded, and recently re-determined by an Arizona court, to use your IRA or inherited IRA as an asset protection device from creditors. (Most other state challenges to date, also conclude IRA funds, even when inherited, are exempt from creditor claims) 

Just don't forget that protection afforded -- ends the day some "dummy" convinces you that cashing in your Inherited IRA and re-investing what's left with them!

So, be sure to keep your beneficiary elections current. And, remember the designated beneficiaries listed on your IRA always supersede the instructions of your will or trust.  In other words, a "beneficial asset" such as an IRA is  more powerful than a 10 page Last Will or a 50 page Revocable Living Trust!  And, it is only one page!  That is why you should be extra careful in filling it out properly or ask us for assistance!


Special Closing Note About the Rules:  In some cases, you might want to "disclaim" the IRA you've been notified you have inherited according to some legal experts. All of these scenarios require a valid contingent or secondary beneficiary to be listed and available. (alive and well)  Cases where this may be practical would be:

1. To keep the inheritance out of your estate for estate tax purposes.

2.  Depending on state law, to keep the inheritance from being subject to your creditors.

3. To save income taxes if the contingent beneficiary is in a lower income tax bracket.

4. To get the IRA to the deceased IRA owner's surviving spouse (perhaps as the contingent beneficiary) so he or she can roll it over, name new beneficiaries, and thus -- get a longer stretch-out period.  And possibly so they can convert to a Roth or so that the funds will qualify for the marital deduction under the estate tax laws.

Tip:  I can help by making a professional referral to a qualified Inherited IRA lawyer if you need their legal services in this area of discussion.  All of these cases for a legal "disclaimer" would warrant a reason to have a professional legal conference. (And most likely other scenarios not mentioned here)

 

 
So, What Are My Options If I Feel I Need Help?
 

 IS ANYONE BENDING OVER BACKWARDS TO HELP YOU RIGHT NOW?

M.D. Anderson works hard for clientsSo who should you hire or consult with to avoid those simple mistakes that trigger instant taxation of your loved one's inherited IRA? Who can get it right so you don't get wronged?

Who is willing to bend over backwards to help you get what you want?

The hard part, is finding that someone special you can trust to assist you -- in time! And, hopefully, finding someone in your local area. The best starting place is to ask them if they have ever worked on large IRA cases in the past other than just doing spousal rollovers. And ask how successful they have been in helping their clients avoid needless income taxation on inherited IRAs. (Without the IRS questioning the work they did)

Or, you can hire me no matter where you live for advisory, once a small starting advisory retainer is paid. If it costs you a few hundred dollars in  consultation fees with my firm in order to help save a a few thousand or tens of thousands of dollars (more like hundreds of thousands for large IRA clients we have helped) in needless income taxes. I think you will agree it is a very good trade!

I have already saved at least a two or three million dollars over the past 14 years of practice in this field for my clients, by practicing in this specialized field. (We just help you delay what the IRS/state tax agencies will eventually get) And, if you want to explore the possibilities of converting your IRA to a Roth IRA, my services extends to that important option as well for consulting and tax projections of the cost.

With more and more lawyers and CPA's also building their practices to give proper large IRA consultations, especially with unknown federal estate tax issues looming -- you may very well find answers with your own advisors who can help you and guide you in this important process. If you need your current tax professional to learn more on this subject, send them to this site! 

But, if you feel stress on your own case or can't find proper local help, my skill is in integrating the tax information on Inherited IRAs and how it relates to your specific current or planned investment vehicle (home). With a short consultation with me, it can be assured that the best and most efficient new Inherited IRA account is the result. And of course, I will take that special care and attention that your current advisor might be ignoring, so ALL of the money remains tax-deferred if at all possible.

Or, if you like, I will help your current advisor so a professional review and action plan can be put together for you, while still working with your trusted advisor. Most are open to suggestion as they will admit it is not an area they fully practice in or understand. (They purposely leave this area of consulting up to people like me)


YOU DESERVE BETTER ODDS THAN IN A GAME OF PLINKO

Inherited IRA's are like the Plinko GameI am staying away from giving you the boring specific IRS rules and regulations on Inherited IRA's for the very reason it will put you asleep, and motivate you to close your browser because you got overwhelmed with data you can't process or handle.

Just be assured if you need an Inherited IRA expert, those rules will be applied to your specific case and each case has special circumstances that require individual research anyway, before actual advisory can be given. It is not a one size fits all type of advisory business. 

Rather, it is kind of like the PLINKO game on the Price is Right television show. I start at the top and go one direction when a trust is the beneficiary of your Inherited IRA account. (There is a pretty good chance you will end up with a -0- on this one, if you don't get help from a qualified inherited IRA advisor who understand the rules for trust owned death benefits.) 

But, I go another direction if it names you specifically as a "designated beneficiary". (This is the very best route of course!) And yet another direction if you aren't, which means you have only as little as five years to remove the funds and pay your income taxes on them. And sometimes - no time left! (You are in Inherited IRA Hell, you just don't know it...)

That PLINKO chip can also split out again in different directions depending on if your deceased loved one had already taken his or her current year RMD, before departing this world. And yet another direction if a disclaimer is allowed in legal documents or intestate law in estate settlements.  

Your heirs can end up with problems, by YOUR own mistakes as account owner. Or your heirs can make mistakes right after your death by not registering the account properly. Yet, a third risk is improper management throughout the years that can also suddenly end a good thing - and cause needless taxation. For a low annual retainer, our firm can be hired to "watch" your account while you are here and then, after your demise so problem areas can be avoided, if not completely eliminated.  

Recent IRA accounts reported to us by registered guests on this site in April 2012 amounted in over 55 million dollars of mostly IRA money. This was after I was quoted in a Wall Street Journal column. All of these people were concerned about just how well their IRA's were set up to avoid the problems we have outlined on this site. You too can "fix" problems and not leave it to chance when you pass on.  

Ultimately, you or your beneficiaries will pay one way or the other for advice or pay because of the consequences of the lack of it, when it comes to these complicated products known as Inherited IRA's.  

M.D. Anderson Signature

 Call me Toll-Free: 1-800-782-2806 or if in the Valley (Arizona), 480-345-1616

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Disclaimer: The information contained on this site, though deemed reliable and accurate, is solely the opinion and statements of the advisor profiled. Therefore, it should be considered "general" in nature and no action should be taken based on this information until such time your specific situation and circumstances can be reviewed and analyzed by competent and qualified tax, insurance, legal, and/or other financial advisors. This information is not intended, nor should be construed as legal advice. FSI can not and will not give you legal advice. If you need legal advice, we can refer you if you desire and request it. Founded in 1990, FSI is a long-term Financial Advisory and Arizona domiciled Corporation now providing services nationwide and in some foreign countries. Services profiled herein are available unrestricted to Arizona residents. Residents outside of Arizona are eligible for certain consulting services and to legal (lawyer) referrals by our firm when requested of us. For Arizona residents, communication with an Arizona Certified Legal Document Preparer (AZCLDP) are private and confidential but are not "privileged", such as they would be with an actual Lawyer.

Besides being a licensed  Arizona Certified Legal Document Preparer, Mr. Anderson is also an Arizona Professional Accountant/Consultant (soon to apply to the IRS as an enrolled agent) and licensed IRS registered tax preparer and ERO (Electronic Return Originator) agent/firm. He also is an Arizona licensed Professional (Realtor®)/consultant and a licensed Professional insurance agent and corporation for life, health or annuity sales. Lastly, he and his firm is an appointed representative for Royal Metals Group as a Professional Precious Metals consultant and sales advisor. 

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