A Safer Retirement and Environment – What We’re Implementing to Help Keep You Safe: READ MORE

Here at Chadmere Capital Inurance and Financial Services, we are adhering to state and local guidelines in order to protect both the health and safety of clients and staff. Keeping our clients and staff safe is our highest priority and we’re taking all appropriate measures to ensure a safe environment. Should you prefer to not meet face-to-face, we are continuing to serve our clients through virtual settings such as Zoom or phone calls.

We look forward to continuing to help individuals and families achieve their ideal retirements.

Chademere Capital Insurance and Financial Services
(803) 242-1050

CLOSE

Book or Change Your Appointment

YEAR-OF-DEATH RMDS AND IRA CREDITOR PROTECTION: TODAY’S SLOTT REPORT MAILBAG

By Ian Berger, JD
IRA Analyst

Question:

Your newsletter is so helpful, and your book was a great resource to me when my mom passed away 5 years ago and I inherited her IRA.

I am 76 and have not taken my RMD for 2021. Should I pass away and my wife age 69 transfers my IRA to hers, must my RMD for 2021 be taken first?

Thanks much. A columnist in the Chicago Tribune led me to you years ago.

F. Perry

Answer:

Thanks for the kind words! If you die in any year before taking your full RMD for the year, your wife as beneficiary must take your RMD for that year. If she does a direct transfer of your IRA to hers, the year-of-death RMD doesn’t have to come out first. Instead, that RMD can be paid from your wife’s IRA – as long as it happens by the end of the year. If, however, she does a 60-day rollover, the RMD would have to be paid out first.

Question:

Good afternoon!

I have a question about a client that has a traditional IRA funded with rollover funds from a DB plan.  Client wants to make IRA Contributions to his IRA.  He was told by another advisor that the IRA he has now carries special liability protection because it was rolled over from a DB Plan years ago.  She told him not to add any funds to it or it would lose that protection.  Is that true?  Should we open a separate IRA for the contributions?

Thanks so much!

Best,

Becky

Answer:

Hi Becky,

Your client’s rollover funds enjoy unlimited protection against creditors if he files for bankruptcy. IRA contributions and earnings (non-rollover monies) are also protected in bankruptcy.  But that protection is lost once the non-rollover funds exceed a certain dollar limit ($1,362,800 in 2021) – still a very high amount. Adding new contributions to the existing rollover account won’t cause the rollover funds to lose their unlimited protection. However, it wouldn’t hurt to keep the funds in separate accounts to more easily keep track of which IRA monies have unlimited protection and which don’t. (Creditor protection against lawsuits outside bankruptcy depends on the law of the state where the IRA owner lives.)

https://www.irahelp.com/slottreport/year-death-rmds-and-ira-creditor-protection-today%E2%80%99s-slott-report-mailbag

Ready To Take

THE NEXT STEP?

 

For more information about any of our products and services, schedule a meeting today.

Schedule a Meeting
Or give us a call at (803) 242-1050

Investment advisory services offered through Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser. Nothing on this website constitutes investment, legal or tax advice, nor that any performance data or any recommendation that any particular security, portfolio of securities, transaction, investment or planning strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations, execution of required documentation, and receipt of required disclosures. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD #175083.

 ADV Part 2A & Form CRS              Privacy Policy