Life and Death Planning for Retirement Benefits

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Life and Death Planning for Retirement Benefits

along with each other or if not all of them are individuals, or if they are individuals of substantially different ages. See ¶ 7.2.02 (D), ¶ 1.8.02 . At one time, keeping “rollover” IRAs separate from “contributory” IRAs enabled the participant to roll the “rollover IRA” into a QRP. This reason for keeping separate IRAs was eliminated years ago; see ¶ 2.6.02 . But there is still a difference—a “pure” rollover IRA (one that contains only rollovers from QRPs and 403(b) plans, and no “regular” contributions) has greater protection in bankruptcy than a “contributory” IRA. See ¶ 2.7.02 for reasons why a client might want to leave funds in (or transfer funds to) a particular type of retirement plan, even if that would mean having multiple plans and IRAs. 2.7.05 How to take RMDs and other distributions Use extra voluntary income tax withholding from a retirement plan distribution to avoid a penalty on underpayment of estimated taxes. See ¶ 2.3.05 . Using the permissive aggregation of accounts for RMD purposes, take each year’s IRA RMDs from the smallest account(s) first, to close them out and consolidate. Save commissions! Take RMDs in kind rather than selling the asset inside the plan to take cash.