June 2024 – Fraternal Benefits Message

Retirement accounts like 401(k)s, IRAs, and pension plans are often key components of personal wealth. Properly integrating these into estate planning is crucial for efficient and tax-effective wealth transfer to beneficiaries. Beneficiary designations: Ensure that your retirement accounts and life insurance beneficiary designations are updated and align with your overall estate planning goals. These designations usually take precedence over wills or trusts. Tax implications: Different retirement accounts have varying tax treatments. For example, heirs might owe income tax on traditional IRA or 401(k) distributions, unlike Roth IRAs or Life Insurance. In certain situations, it is better to leave life insurance as you can leave the same inheritance for pennies on the dollar, use the difference yourself, and leave your beneficiaries tax free money. It’s important to understand these differences to minimize taxes for beneficiaries. Spousal inheritance: Spouses inheriting retirement accounts typically have more options, like rolling the assets into their own IRA, offering greater tax-deferred growth potential. Rules for non-spouse beneficiaries: Non-spouse beneficiaries, such as children, are subject to different rules, including mandatory distributions that could impact the account’s tax advantages. Integrating retirement plans and life insurance into your estate strategy ensures these assets are distributed effectively and per your wishes. Tailoring these aspects of your estate plan can significantly benefit your heirs. The Knights of Columbus can help you maximize your options when planning your retirement and establishing what you want to happen. Give me a call and let me know how I can help you best.

Ryan Janak – Field Agent

832-693-3160

Ryan.Janak@kofc.org