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Kyle Wynn & Associates, PLLC

Who Should Get an IRA Inheritance Trust®?

For example, let's take a child age 45 who inherits a $200,000 IRA and withdraws only RMDs.  If the IRA grows, from both income and principal appreciation, at the rate of 6% a year, then 30 years later when the child is age 75, the child will have taken over $400,000 in RMDs and still have almost $300,000 left in the IRA to use over his or her later years or pass down to his or her children (the original IRA owner's grandchildren).

To sum it up, the original $200,000 inherited IRA became worth over $700,000 to that family! (And that doesn't include the future value of the RMDs if they're placed into an investment account).  If we assume the IRA will be worth over $200,000 when the owner passes, or will earn a higher rate of annual return, or will go to a younger beneficiary, that IRA may eventually be worth well over $1 Million!

IRAs may now be a huge part of a family's financial future, perhaps for generations, but this type of planning is not simple.  These laws are incredibly complex and often evolving, so rely on qualified Estate Planning attorneys, like those at Kyle Wynn & Associates, PLLC.

The IRS changed its RMD rules, allowing a non-spouse beneficiary (for example, a child) to take or "stretchout" the taxable RMDs over a much longer period, using his or her own life expectancy rather than the shorter life expectancy of the original IRA owner.  This means that money inside an inherited IRA may now compound much longer, tax-deferred, if the proper choices are made.

Until recently, the IRS has not liked trusts as beneficiaries.  In its RMD regulations and previous rulings, the IRS had made it very difficult for an IRA inherited through a trust to both qualify for maximum tax “stretchout” using each primary beneficiary’s own life expectancy and also achieve the higher level of asset protection afforded by a trust that may accumulate the RMDs and hold them for future distribution. Generally, one benefit had to be traded off for the other.

Your IRAs May Now Represent the Largest Single Asset Your Loved Ones Will Inherit!

As more of us are retiring and rolling over large 401(k) and other retirement plans to IRAs, proper tax and estate planning for IRAs have become critically important.  When an IRA owner becomes age 70½, he or she must soon begin to take required minimum distributions (RMDs) and pay federal and state income taxes on those withdrawals at his or her highest rate brackets (unless the IRA is a Roth IRA, in which case the withdrawals may be income tax free).

The new IRA Inheritance Trust® now permits the IRA owner and his or her family to enjoy maximum “stretchout” and protection benefits at the same time.  The protective features of this trust have previously been tested and proven over many years of court decisions.  And the IRS has approved the income tax “stretchout” feature as well (see PLR 200537044).  This new standalone IRA beneficiary trust is not the garden variety that has existed for some time, but rather represents a huge breakthrough.  The IRA Inheritance Trust® is the most advanced “next generation” trust that solves the tricky drafting problems associated with maximizing both the stretchout and protection of benefits.  

How come you've never heard of it before?

For anyone who has IRAs (including those owned by his or her spouse) and/or 401(k) or other retirement plans that total over $100,000 -- this IRA Inheritance Trust® is virtually a no brainer decision.  Simply stated, the income tax reduction and asset protection planning this trust provides may potentially save a million dollars or more for that IRA owner’s family!

The attorneys of Kyle Wynn & Associates, PLLC are expertly trained in this type of trust and it gives us great pride to help so many families create amazing gifts for their beneficiaries.  Call our office to set up your appointment and start your planning now!  (601)-978-1700  or (800)-839-7857