The Complete Cardinal Guide to Planning For and Living in Retirement by Hans Scheil

Author:Hans Scheil
Language: eng
Format: epub
ISBN: 978-1-936797-82-0
Publisher: Leapfolio
Published: 2016-02-22T16:00:00+00:00

To put IRAs in perspective:

Americans hold $24.2 trillion in retirement assets. By comparison, the entire national debt in 2014 was $18.1 trillion.

$7.3 trillion is held in IRAs; $6.6 trillion is held in 401(k)s, 403(b)s, 457(b)s, and other defined contribution plans.

Americans rolled over $324 billion from plans to IRAs in 2013.

Your IRA may be one of your largest financial assets and you may be counting on it for your retirement income. The biggest mistakes in handling these assets usually are not about how your IRA is invested; rather, mistakes are usually made in other areas, such as account transfers, beneficiary designations, and required minimum distributions. If one wrong transaction is made with an IRA or other retirement plan, it might well be irreversible and cause big tax liabilities and possibly penalties. Don’t try IRA planning on your own—consult with a trained and knowledgeable IRA expert.

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The three main IRA planning areas our clients need help with are rollovers and transfers, beneficiary designations, and required minimum distributions (RMDs). IRA money is referred to as “qualified,” which means the taxes due on principal and earnings are deferred. (Exceptions are Roth IRAs and nondeductible IRA and 401(k) contributions, see below). Qualified money is held by a custodian who is responsible for following Internal Revenue Service (IRS) rules. In order to retain the tax-deferred status, the money must stay in the IRA and be titled in the IRA owner’s name. If the owner takes possession of the money and fails to precisely follow every step of very complex rules, the owner will be pushed into a high tax bracket, the IRA will be canceled, and the taxes on the IRA will all come due in one year. A very high income resulting from a full distribution creates a host of other problems as well.

Ed Slott has developed a well-deserved reputation as “America’s IRA expert.” In addition to publishing books and educating consumers through Public Television specials, Ed’s company provides extensive training about the complexities of IRAs to financial advisors nationwide. I went into Ed’s Elite Advisor training thinking I already knew most of what he was going to teach me. Was I wrong! The premise of the Elite Advisors is that most professionals don’t have the specific training needed to help clients get the most of their IRAs. The training highlights case after case in which the advisor or attorney messed up through ignorance of the law and IRS rules. At Cardinal, when we prepare financial plans we consult with Ed’s team of technical experts to make sure we are advising clients correctly. As just noted, mistakes can be costly and the IRS allows little or no leeway. I have great confidence in our work knowing that Ed and his team are at my disposal when solving problems for my clients. It bears repeating: Don’t try IRA planning and management at home—seek professional advice from an IRA trained expert.

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