Louisiana Wealth Planning News

Estate Planning with your 401k Account

April 7th, 2007

In the past, if a person died owning a qualified retirement plan account, only his surviving spouse was entitled to roll over the balance into an IRA. Once it was rolled over, it would be treated as if the surviving spouse had created the IRA and allowed him or her to defer distributions until age 70 1/2. If anyone other than the spouse inherited it, then they would be forced to take distributions over a period of one to five years.

Under the new law, any beneficiary can roll over the inherited account into his or her own IRA. With an inherited IRA, a non-spouse beneficiary can use his or her own life expectancy to determine the required minimum distributions. This reduces the amount that must be withdrawn each year, and allows the account balance to continue to grow, income tax free, over the beneficiaries lifetime. When the beneficiary is a young person with a long life expectancy, this type of planning, properly managed, can build wealth for your future generations.

By taking this strategy one step further and naming a trust as a designated beneficiary, you can also protect the assets in the account from creditors (including former spouses of beneficiaries) and spendthrift beneficiaries, who would withdraw more than the required minimum distributions.

Does this Change Affect You?
If you have a 401k or other qualified plan account through your employer, or are named as a beneficiary of someone’s qualified plan account, you may benefit from this new law. If you want to know more, feel free to call or email me for more information.

Filed under: Estate Planning Basics by Myrna Arroyo | No Comments »

Take a Tax Break for Your Child’s Summer Camp

April 7th, 2007

Summer is around the corner. Did you know that the cost of summer camp for your kids could give you a tax deduction?

Here is a link to a good article on deductions that are available for summer day camps for your kids. I hope it’s helpful. Most of the folks I work with are unaware of this potential tax benefit.

http://articles.moneycentral.msn.com/Taxes/CutYourTaxes/TakeATaxBreakForSummerCamp.aspx

Filed under: Taxes by Myrna Arroyo | No Comments »