Know the Contribution Limits
There is a maximum amount you may contribute each year to
your IRAs. The aggregate limit for 2016 is $5,500 ($6,500 if age 50 or older).
This limit includes all contributions to all of your traditional IRAs and
Avoid
Excess Contributions
If you exceed the annual contribution limit, you will be penalized
unless you withdraw the excess amount in a timely fashion. The penalty is
currently 6% and this penalty applies each year the excess amount remains in
your IRA(s).
Take
RMDs on Time
Whether you are an IRA owner who is over age 70½ or you have
inherited an IRA from someone, there is a 50% penalty for every missed required
minimum distribution! Yes, a 50% penalty on the undistributed amount so mark
your calendars with the annual December 31st deadline and avoid this common
error.
Keep
Beneficiary Forms Updated
If you fail to name a designated IRA beneficiary, it could
have unintended consequences. What is a “designated”
beneficiary? Aren’t all beneficiaries “designated”? No, they are not the same!
A designated beneficiary is a living, breathing, human with a remaining life
expectancy. Charities cannot be designated. Estates cannot be designated.
Trusts cannot be designated. Your beloved dog cannot be designated. Failure to
name a designated beneficiary essentially diminishes the opportunity for
individual beneficiaries to maximize the benefits of tax deferred distributions
on an inherited IRA.
Life changing events such as marriage, death, divorce, birth
and adoption occur regularly and could impact your beneficiary designation
decisions. Every IRA owner should conduct a beneficiary form review at least
once a year to ensure that IRA assets will pass to the intended beneficiaries.
Don’t
Guess, Know the Rules
Do you have questions or need help with your personal situation?
Your retirement distribution expert can assist you! Call today to schedule a
free consultation, ask questions or discuss important IRA planning issues such
as: conducting a beneficiary review, correcting IRA mistakes, making sure
you’re with the right IRA custodian
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