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If an IRA owner dies and leaves his IRA to a nonspouse beneficiary, that is considered to be an “inherited IRA”.

Example:
 

Many individuals establish trusts as part of their overall estate plan.  There are many valid reasons for establishing a trust such as asset protection, estate tax savings, and providing for incapacity.  

However there are many reasons for avoiding a trust, if possible, if the assets involved are not significant.

There are significant compliance costs for administering and maintaining a long-term trust which can run into the tens of thousands of dollars or more after the creator of the trust passes away.

In addition, many trustees are exposed to significant liability if the trustees do not keep up-to-date with  

This week President Bush signed a new pension relief bill designed to help retirees by eliminating the required minimum withdrawals from their retirement plans. We can foresee many tax advantages that this bill will open up for our clients and people over the age of 70. Most importantly this will buy additional time to rebuild your portfolios after the hit they have taken in the financial markets over the last few months. Lastly it will be free from immediate taxation.

In August 2008 the General Accounting Office (GAO) issued a Report to the Committee on Finance, U.S. Senate regarding Individual Retirement Account compliance issues.

The GAO Report is in excess of 50 pages and discusses the complexities of complying with the Individual Retirement Account (IRA) tax rules. I will help you understand just what this means for you.

Sy Goldberg, CPA, MBA, JD, a senior partner in the Jericho law firm Goldberg & Goldberg, P.C., is Professor Emeritus of Law and taxation of Long Island University. He has taught many CPE courses on retirement distribution planning at the state and national level and has taught CLE courses for the New York State Bar Association, local bar associations and law schools. He has been quoted in major publications, including

The New York Times, Forbes, Fortune, Money Magazine, U.S. News & World Report, Business Week, and The Wall Street Journal, and has been interviewed on CNN, CNBC, and WCBS. Formerly associated with the IRS, he has been a member of the IRS Northeast Pension Liaison Group for over 15 years, and has been involved in conducting continuing education outreach programs with the IRS on the retirement distribution rules. He has authored guides for the American Bar Association and the America Institute of CPAs on retirement distribution rules. In addition, you may be interested in a consumer’s version entitled “Inherited IRAs: What Your Family Needs To Know” published by J.K. Lasser (JKLasser.com).

Please contact Sy at info@goldbergira.com or www.goldbergira.com