Did you recently inherit an IRA from a loved one? An IRA is an effective savings tool because it offers tax-deferred growth, which means earnings inside the account aren’t taxed until a distribution is made. In a Roth IRA, earnings may never be taxed.
 
That tax deferral can help an IRA owner accumulate assets more quickly than in a taxable account. As a beneficiary on the IRA, however, you may have important tax considerations to think about before you file your beneficiary claim.
 
Many beneficiaries take their benefit as a lump sum. It’s understandable why that’s a tempting option. Before you take your benefit as a check, though, you may want to think about all your options. Below are a few IRA beneficiary options. Consult with your financial professional to see which one best aligns with your needs and goals.
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Roll it into your own IRA.
 
This option is only available for spousal beneficiaries. If you’re the beneficiary on your spouse’s IRA, you have the option to roll the death benefit into your own IRA. You avoid taxes on the distribution, and the inherited amount becomes a part of your IRA as if it were your own contribution.
 
This is a popular and helpful option because it’s simple. You can keep all your assets in one account, which may make it easier to manage your income and your investment strategy. Plus, all the rules regarding distributions are based on your age rather than your spouse’s, so it may be easier to stay within required minimum distribution guidelines.

Establish an inherited IRA.
 
If you’re an IRA beneficiary but aren’t the spouse of the individual who passed away, you may be tempted to take the benefit as a lump-sum payout. However, doing so could create a sizable tax liability, especially if the account is a traditional IRA. Distributions from traditional IRAs are taxable as income. The payout could push you into a higher tax bracket.
 
An alternative is to create an inherited IRA. The account is titled in your name as beneficiary of the loved one who passed away. You get to keep the funds in the account but are required to take minimum distributions each year. This allows you to increase the assets on a tax-deferred basis while spreading out the tax liability over many years. If you don’t need the money right away, this could be a wise option.

Take the lump-sum benefit.
 
Finally, you always have the option to take the benefit as a lump sum. Again, if the account is a traditional IRA, you’ll likely face income taxes on the distributed amount. Those taxes could be significant, so it’s important to consult with a financial professional.
 
If the account is a Roth IRA, the distribution is tax-free. However, you still may want to consult with a professional, so you can plan on how to use the windfall to best meet your financial goals.
 
Ready to develop a strategy for your inherited IRA? Let’s talk about it. Contact us today at Stoll and Basler Financial Services. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18276 - 2018/11/27

​The holiday season is here. For many Americans, that means it’s time to give to charity. A recent study found that 63 percent of all Americans donate to charity in the final two weeks of the year. Most of those donations go to churches, poverty-related organizations and children’s charities.1
 
There are a variety of ways to donate to charity. You might give gently used items such as clothes, furniture or toys. You might choose to donate your time. And of course, you can always give cash.
 
You also may be looking for ways to make a more lasting impact. You may have significant assets or insurance that you’d like to donate to charity over a long period of time. Before you start to gift assets, however, you may want to develop a strategy. That way you can be sure your donations are used in a way that aligns with your wishes, and you can meet all your objectives.
 
A financial professional can help you develop your gifting plan. Below are a few questions to get you started so you can identify the best tools and methods for supporting your favorite cause:
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What are your goals for your charitable gifts?
 
Any plan or strategy should start with your goals. A charitable giving plan is no different. You may know what cause you want to support and possibly even which specific organization but think more specifically about the use of your gift. What kind of impact do you want to have?
 
Research potential charities and see how efficient they are with their resources. A number of websites and organizations show how much each charity spends on overhead, salaries and administrative costs. You also may be able to speak directly with the charity and even direct how you want your gifts to be used.
 
Also consider the timing of your gift. Do you want to gift assets while you’re alive, so you can see how they’re put to use? Or would you like to leave the donation as a legacy after you pass away? If the latter is the case, you may have more options available, such as using life insurance or a trust to facilitate your donation.

Are you trying to achieve certain tax benefits?
 
Your motivation for giving to charity is probably that you want to help others. However, there are also tax benefits related to charitable donations, so you can help yourself at the same time. The types of tax benefits available depend on your specific donation.
 
For example, you may be able to deduct your donations on your tax return, up to a certain cap. You also may be able to reduce gains taxes on certain assets by donating to charity or using a charitable remainder trust. A tax or financial professional can help you determine which types of donations would provide the greatest tax benefit.
Could you give existing assets instead of cash?
 
The simplest way to donate to charity is often to write a check. However, that’s not your only option. You could also donate assets that you already own. As mentioned, if you have assets that have appreciated significantly in value, you might consider donating them to charity with a trust. The trust can sell the assets and avoid gains taxes, then pass the funds on to the charity upon your death.
 
You could also donate a life insurance policy to charity. If you have a policy that you no longer need, consider making a charity the new owner and beneficiary. You get a tax deduction for your paid premiums, and the charity gets the death benefit after you pass away.
 
Ready to develop your charitable strategy? Let’s talk about it. Contact us today at Stoll and Basler Financial Services. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
1https://www.worldvision.org/about-us/media-center/survey-majority-americans-donate-charity-end-december
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18276 - 2018/11/27