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Estate Planning Topics

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Planning for a Disclaimer

While it may seem unlikely, there are situations where beneficiaries decide to turn down an inheritance. Whether it’s to avoid the taxes associated with the assets, or to pass them along to another beneficiary, a disclaimer can help a beneficiary with the option to refuse an inheritance.

Executing a disclaimer, however, is not a simple task, and for it to work properly, a proactive plan should be put into place. Several steps should be taken, including naming contingent beneficiaries and consulting with a qualified professional.

Click here to download “Planning for a Disclaimer in 5 Easy Steps”

Have questions about disclaimers or options for inherited accounts? We are here to help! Click here to contact the office nearest you.

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Examining Qualifying Longevity Annuity Contracts in 5 Easy Steps

What is a QLAC (Qualifying Longevity Annuity Contract)?

A QLAC is a type of fixed income annuity that has special attributes and is held in a retirement account.

#1 - RMD (required minimum distribution) exclusion. The fair market value of your QLAC is excluded from your RMD calcuations. What’s the benefit? You can keep a greater portion of your IRA (or other retirement account) intact longer while enhancing the income stream the annuity will provide in the future.

#2 - The distribution deadline. You don’t have to start taking distributions from your QLACs at age 70 1/2, but you can’t delay them indefinitely. QLAC distributions must begin no later than the first day of the month after you turn age 85.

#3 - Your investment threshold. You will be limited as to how much of your retirement savings you can invest in a QLAC. The limit will be the lesser of $125,000 or 25% of your applicable retirement account assets. The 25% limit applies on a per account basis except for IRAs, BUT the $125,000 is a cumulative limit for all QLACs in all retirement accounts. For IRAs, the 25% limit will apply to the prior year-end total of all IRAs (not including Roth IRAs).

#4 - Facts to keep in mind. QLACs cannot be variable or equity-indexed annuity contracts, though insurance companies may offer contracts with cost-of-living adjustments. QLACs cannot offer any cash surrender value. So if you buy one, just be sure you won’t be needing that lump-sum of money anytime soon! 

#5 - The death benefit. QLACs can offer two death benefit options: a life annuity (the rules can vary depending on a number of factors) and a return-of-premium option. These, of course, are the potential death benefit options allowed by the tax code, but that doesn’t mean that every QLAC contract will offer all of these options.

Have questions? Click here to contact us. 

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How to Calculate Non-Spouse Beneficiary Distributions

Have you recently inherited an IRA as a non-spouse beneficiary? If so, then you will soon be required to determine exactly how much will need to be taken as your first required minimum distribution. There are ways to “stretch” the tax benefits of these accounts by leaving them in an IRA as long as possible; however, you will need to understand the specific rules for your situation.

If you are a designated beneficiary, the process is straight forward, as you usually will be required to use your own life expectancy to calculate your distributions. 

However, for non-designated beneficiaries, different rules apply. Not taking enough out before annual deadlines can result in penalties and fees.

To maximize your inheritance and limit penalties, click here  or click the image below to view our flow chart, “How to Calculate Non-Spouse Beneficiary Distributions”.

Have additional questions about how to calculate non-spouse beneficiary distributions? Click here to contact us so we can get you the answers you need to feel confident about your decision.

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