If you were the beneficiary of an IRA last year, read on! There are a few important dates that you should be mindful of:

• Friday, September 30, 2011
  

If you shared space on the beneficiary form with a charitable or nonprofit beneficiary, make sure that charity is paid in full from the IRA before this date.

For example, suppose Norma died in 2010 with a $500,000 IRA. She named her three children and the Lingap Children’s Foundation (LCF) as equal co-beneficiaries of her IRA. LCF would receive 25% of the $500,000, or $125,000.  Norma’s children can instruct the IRA custodian to send the charity a check for $125,000 by September 30, 2011.

The process should get started well before that date to make sure it gets done on time, of course. Once this is completed, Norma’s three children will be designated co-beneficiaries of a $375,000 IRA.

• Saturday, December 31, 2011
  

By splitting the IRA before December 31, beneficiaries will take required minimum distributions (RMD) based on their ages. If the IRA is split after December 31 of the following year, beneficiaries will have to use the age of the oldest beneficiary to calculate the RMD. This will allow younger beneficiaries to stretch out the inherited IRA and defer taxes more effectively, which is a great investment opportunity.

Continuing with the example above: By December 31, 2011, Norma’s three children can separate her IRA into three $125,000, properly titled, inherited IRAs. Norma’s children will use a direct transfer of the inherited funds and make sure that Norma’s name remains on the account (i.e. Norma Doe, deceased, IRA for benefit of John Doe). The accounts will be under the three childrens’ Social Security numbers, not Norma’s. This will allow each child to defer taxes most effectively. John is 50 and he takes larger RMDs each year than his brother and sister, Bill and Mary, who are in their 40s.

If they would have split their IRA after the December 31st date, Bill and Mary would have to take the same RMDs as their older brother John. Bill and Mary would then lose out on some of the stretch.

Need more information about multiple beneficiaries on an inherited IRA? Give us a call or send us an e-mail at questions@richmondbrothers.com.

With all of the questions looming about the debt ceiling, we wanted to make sure to address those concerns. Although the situation currently in front of lawmakers is disturbing, we are hopeful that the U.S. will reach a deal and avoid default.

If a new Reuters poll is any indication, most economists think disaster will be averted. A substantial 38 of 40 economists recently surveyed by Reuters believe legislators will reach a deal prior to the August 2nd deadline.

Rest assured knowing that we are continuing to monitor this situation (and any other situation) that may affect your money and the accomplishment of your goals and objectives.

Did You Know?

The FTC estimates that as many as nine million Americans have their identities stolen each year.

Help take steps to avoid having your identity stolen at our upcoming Community Shredding Event!

On Saturday, August 6 between 10 a.m. and 2 p.m., we will sponsor our first community-wide shredding event at the Brown Street entrance of Cascade Falls Park. With this event we plan to:

• help Jackson community members protect themselves from identity theft
• raise money for the American Cancer Society Relay for Life
• promote recycling

What Should You Bring?

You can bring boxes of sensitive paperwork to be shredded on site by a mobile unit of Shred-It, the world’s leading document shredding and recycling company. Gather a box full of information to be destroyed with:

• account numbers
• birth dates
• passwords
• PINs
• signatures
• Social Security
• driver’s license numbers

Please note that paperclips and staples do not need to be removed. In return, we are requesting a $10 donation to the American Cancer Society (per banker’s box size of materials). For additional information on what to shred, visit: http://www.shredit.com/shredding-service/What-to-shred.aspx

Please Pass the Word to Your Friends, Family & Neighbors!

We are pleased to offer this service to the Jackson community to not only help community members avoid identity theft, but also to educate them on additional steps they can take to defend themselves against this growing dilemma. We hope to see you there! For more information, please contact Kira at 517-536-5000 ext. 17.

We wanted to share this article with you: Beneficiary Battles – Consider converting a 401(k) to an IRA before a second marriage if the new spouse isn’t the desired heir. It is written by world re-known CPA and mentor of Richmond Brothers, Ed Slott.

This article points out some of the subtle, yet profound differences between company plan rules and IRA rules. It is a good warning if you are still working and are getting or have been re-married. It is also a reason not to leave funds with your employer after you leave work, should you be in a second marriage. We hope you find it to be informative.

As we celebrate our Independence Day 2011, let us thank our forefathers for the gifts of independence and freedom, celebrate those gifts, and hold in our hearts those who work for freedom around the world.

We hope you enjoy the festivities of the weekend with your family and friends!

Please note: our office will be closed on Monday, July 4th in honor of the holiday.