Taking your retirement plan into your hands is the only way to ensure your future is secure. An Arizona IRA, or Individual Retirement Account, is a very valuable resource for those who take planning for the future seriously. This type of account offers people an alternative to hoping the SSI program will still be intact once they reach retirement age; it is very unlikely that Social Security Income will be available for all of the generations in the workforce today.

Many people have questions about what happens to your IRA funds should you pass before you are able to spend all of the money you previously deposited in the account. If you do not plan properly, the IRS may be the ones who benefit from your hard earned savings. Naming a beneficiary is extremely important; in most cases you are even able to name more than one heir to your IRA – but many people completely overlook this important detail when opening an account.

Naming a Spouse as an IRA vs. a Non-Spouse

Should you name your spouse as beneficiary of your IRA, they will have the biggest advantage over any other beneficiary. If you pass before your husband or wife, they can then take the funds and put them into a new account in their name and it is treated as if they originally opened the account. Your spouse will then having until they are 70-1/2 years of age to make the first withdraw.

If your children or other heirs are named as a beneficiary, they may not have such an easy time with the funds in the account. Non-spouse beneficiaries must make the first taxable withdraw from the account within the first tax year in which they inherited the IRA. They will then be required to make minimum withdraws annually – these withdraws could even count as their income and be taxed additionally.

When IRA Beneficiary Trusts Should Be Established

Naming a trust as a beneficiary is essential in some circumstances. An IRA trust can protect your final wishes and the wellbeing of those you leave behind. Essentially, an IRA trust allows you to control how the funds are spent and your loved ones don’t have full access to the account. This is a common practice when an account holder has children that are not from their current spouse – it allows them to benefit from the account without any roadblocks. IRA beneficiary trusts are also established for minors or people who may be at risk for frivolous spending. Planning who inherits the account ahead of time will save your family from having to sort it out during an already difficult time.

Need Help?

If you are not sure as to what legal document you currently have contact one of our professionals to help you with your estate planning. They will make sure you have all of your grounds covered and have the right legal documents that best suite your wants and needs.

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