By Paul Premack Published 5:34 pm CDT, Friday, August 17, 2018 Dear Mr. Premack: My mother-in-law died (90 years old) and left a traditional IRA to her estate. She did not name beneficiaries, she has four sons, but checked the estate box. I keep getting conflicting answers, is the estate taxed on income or are the beneficiaries of the will (4 brothers) taxed on the income when they receive their portion? Where does the tax burden reside? Someone else said that the estate can file income taxes and pay the taxes over 5 years. I appreciate the clarification. – B.S. An IRA (individual retirement account) is a tax-deferred savings program used by millions of Americans to help fund their retirements. IRAs are great tax and retirement tools, and they need to be integrated into each person’s estate planning. Universally, when an IRA is established and funded, the owner also designates specific individuals to receive the funds in case of death. At age 59 ½ the … [Read more...] about IRA should have designated beneficiary for best tax result
Ira inheritance tax
By Dayana Yochim/NerdWallet The average household led by a retiree makes $48,000 annually before taxes and spends roughly $46,000 a year. That's according to the Bureau of Labor Statistics' (BLS) measure of the income and outflow of "older households," meaning ones headed by someone 65 or older. Meanwhile, the annual average pretax income for all U.S. households is about $74,000 and expenditures are $57,000. While the main source of money for those still toiling in the 9-to-5 world is, of course, wages from work, who signs the average retiree's $4,000-a-month paychecks? Here's the answer to the $48,000 question. Retirees' trillion-dollar allowance By far the biggest source of income for retired Americans is Social Security, which in 2018 will pay out about $1 trillion in benefits, according to data from the Social Security Administration. As of May, the average monthly Social Security benefit for retired workers was $1,412, or just shy of $17,000 a year. (Remember, this is per … [Read more...] about Could you get by on the average American’s retirement income?
When inheriting a traditional IRA, you need to understand the rules and tax consequences that may impact your inheritance.If you take a lump sum, the entire amount will be taxed as ordinary income the year you take the distribution, and this additional income may push you into a higher tax bracket. Additionally, you will forfeit the opportunity to defer taxes on the growth of the IRA.There is no 10 percent early withdrawal penalty on inherited IRAs. However, if you don’t need the money immediately, it’s generally best to avoid taking a lump sum and consider the options available to take distributions over time.If you don’t take a lump sum, eventually you will have to take required minimum distributions (RMD). The options available vary based on your relationship to the original account owner and the account owner’s age when they died.If you are the spouse of the IRA owner, you can roll over your inheritance into an IRA in your own name or transfer it to a … [Read more...] about Jane Young: A look at rules on inherited IRAs
NEW YORK — Carlos Garcia was three years into his first job in technology at Merrill Lynch when he first learned what a 401K retirement savings account was. He was floored when he learned that a colleague had already saved $30,000 in three years, and the company had matched it. The concept of making money off money was foreign to Garcia, an MIT graduate who was born in Texas to immigrants from Mexico. His story is not uncommon among U.S. Hispanics, who lag behind other demographic groups when it comes to saving for retirement. But for Garcia, the episode became the inspiration many years later for Finhabits, a bilingual digital platform designed to make savings and investment accessible for Latinos. Finhabits launched last year into a crowded world of robo-advisers, savings apps, online lending platforms and other financial-technology companies. But it is one of the few aimed at demystifying stocks and bonds for Hispanics, particularly young professionals who have the means to … [Read more...] about New financial apps demystify stocks and bonds for Latinos
Your taxes in retirement may be a lot more complicated than taxes while you’re working.Social Security checks may or may not be taxed, depending on your income. You’ll pay federal income taxes on most retirement plan withdrawals, but additional state taxes depend on where you live. Tax rates on investments can vary as well.Here’s what to expect when you hit retirement age: Social Security taxes depend on ‘combined income’ Whether and how much of your Social Security benefit is taxed will be determined by “combined income.” That’s your adjusted gross income, plus any non-taxable interest, plus half your Social Security benefit. If your combined income is below $25,000 and you’re single, your benefit won’t be taxed. If your combined income is between $25,000 and $34,000, you may pay tax on up to half of your benefits. Over $34,000, up to 85% of your benefits may be taxable. For joint filers, the 50% range is $32,000 to … [Read more...] about Beware of hidden taxes in retirement