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On July 16th Sean Mahoney from MFS Funds Distributors, Inc. joined us as a guest of Kevin Callos, Edward Jones Investments.                                                                                                                      

Sean shared with us the “Top IRA Planning Mistakes” This presentation was an excellent demonstration on why it is so important it is to obtain professional financial advice in setting up your IRA and also in managing distributions or inheritances from an existing IRA. 

A few of the “Top Mistakes” include. 

  • Not naming or updating IRA beneficiaries. Sean shared with us that it is actually very common that beneficiaries are not kept current or not coordinated with other estate planning documents.
  • Not taking advantage of “IRD” if you are a beneficiary. Many IRA beneficiaries do not realize that IRA’s are considered “Income in Respect of a Decedent” according to Section 691(c) of the IRS code, and may create an Estate Tax and/or Income Tax liability. The IRD designation allows beneficiaries to take a federal income tax deduction for any estate taxes paid on the IRS’s assets, limiting double taxation of the assets.
  • Not taking advantage of a Roth IRA. A Roth IRA is a potentially valuable retirement resource. Not only are qualified withdrawal tax free, but distributions do not impact the taxability of Social Security income.
  • Not taking advantage of increased contribution limits.  Did you know that the contribution limit for 2013 is $5,500 and that IRA owners 50 or older can make an additional $1,000 “catch-up” contribution.
  • Assuming that nonworking spouses cannot contribute.  Separate “spousal” IRA’s may be established for spouses with little to no income, up to the same limit as the working spouse.

 Click here to learn more about these and other common IRA mistakes.