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One of the most neglected issues in estate and financial planning is the treatment of a person's retirement accounts.
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Retirement accounts include company-provided plans, Section 401(k) plans, IRA accounts, SEPs, SIMPLEs and Roth IRAs. |
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There are numerous choices as to how to draw down on these accounts. Generally, a person must begin to make withdrawals from a retirement account by April 1 of the year following the year in which the person attains the age of 70 1/2. This applies to all accounts other than Roth IRA accounts. |
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It is usually most advantageous for a person to delay taking withdrawals as long as possible, so as to allow the assets to grow tax-free, and to delay the time when income taxes are due. |
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Any balance remaining in the account at the time of death will pass to the named beneficiaries, who will be required to pay income taxes at the time of withdrawal. |
