Image via Wikipedia Since a surviving spouse gets the most tax breaks of all possible beneficiaries (other than a charity, perhaps), it seems that choosing your spouse as the beneficiary of your IRA may be the best way to go. This is partly due to the availability of delaying taking distributions. Any other beneficiary must begin taking Required Minimum Distributions (RMDs) by the end of the year following the year of the original IRA owner’s death. The spouse beneficiary may defer distributions to the year in which the deceased would have reached age 70½, without taking any action. In addition, any other beneficiary besides the spouse is required to take the RMDs over his or her fixed-term single-life expectancy, while the spousal beneficiary can choose to take the RMDs over his or her single-life expectancy recalculated annually, so that the distributions will actually stretch out over his or her entire […]
July, 2011:
Five Tax Scams to Avoid
The IRS recently published their list of Five Tax Scams to Avoid This Summer (IRS Summertime Tax Tip 2011-08) – but I’d say summer or not you should avoid these: Hiding income offshore, identity theft and return preparer fraud topped the IRS’s list of tax scams in 2011. The Internal Revenue Service issues an annual list of the top 12 tax scams, known as the “Dirty Dozen.” These scams are illegal and can lead to significant penalties and interest and possible criminal prosecution. Image via Wikipedia Here are five year-round scams every taxpayer should know about. 1. Hiding Income Offshore The IRS aggressively pursues taxpayers involved in abusive offshore transactions and the promoters who facilitate or enable these schemes. Taxpayers have tried to avoid or evade U.S. income tax by hiding income in offshore banks and brokerage accounts, or by using offshore debit cards, credit cards, wire transfers, foreign trusts, […]
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Proposed Changes to the Inflation Index
Image by darkmatter via Flickr One of the many proposed changes that is being considered to help resolve the current budgetary issues is to change the index used to adjust Social Security benefits from the current method, using the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, to a much more conservative index known as the Chained Consumer Price Index for all Urban Consumers (or C-CPI-U). (See this article on How Social Security COLAs are Calculated for more information.) Unfortunately, the reason behind making this is change is the fact that it will ultimately save money for the Social Security system, directly at the expense of the beneficiaries of that system. Here’s what you can expect: As an example, the CPI-W indicates a year-over-year increase from June 2010 to June 2011 of 4.1%. Over the same period, the C-CPI-U only shows an increase of 3.4%. This […]
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The Problem with Naming Your Estate the Beneficiary of Your IRA
Image by Dieter van Baarle via Flickr While it seems to be a simple idea to just make your estate the beneficiary of your IRA, thereby allowing you to make adjustments to your final beneficiaries via your will – there is a problem that will arise if you decide to take this route. Most often this line of thinking is used because there is the assumption that the money will be treated the same via your estate as it would if you specifically named the beneficiaries on the IRA documentation. The problem is that IRAs are (as we’ve discussed in many other posts) much different from your other assets, with special rules that apply ONLY to IRAs, and of course, those special rules extend beyond the grave. The Problem with Distribution Here’s the problem: in order to arrange for an extended period of distribution to your heirs (i.e., a stretch […]
Sterling Raskie, MSFS, CFP®, ChFC®
The latest in our Owner’s Manual series, A 401(k) Owner’s Manual, was published in January 2020 and is available on 
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And if you’ve come here to learn about queuing waterfowl, I apologize for the confusion. You may want to discuss your question with Lester, my loyal watchduck and self-proclaimed “advisor’s advisor”.