3 Signs You Should Update Your Retirement Plan

Reports continue to show Americans are not saving enough for retirement. Some retirement account owners may miss out on opportunities that could help grow their assets, even if they are not contributing suggested amounts. TrustCounsel’s tax attorneys created a short and simple checklist that might help you determine if your retirement plans need revising:

1. Legislation changes. Tax rules for retirement accounts are not permanent. One notable tax requirement the Internal Revenue Service changed this year addresses IRA rollovers. Starting on January 1, 2015, only one IRA rollover can be made tax-free each year. This limitation applies to all IRAs owned by the taxpayer. A tax attorney can advise a tax plan with strategic timing of rollovers to help minimize your tax burden and preserve retirement assets. IRA account owners can take multiple rollovers in the 2014 tax year for the final time.

2. Family and life changes. Employment changes, marriage, divorce, births and deaths should all trigger an estate plan update. For retirement accounts, beneficiary designations should be updated to reflect the account owner’s wishes. The owner might also consider creating or amending an IRA Beneficiary Trust. These tools offer creditor protection and help ensure that retirement assets obtain maximum tax-deferred growth for the beneficiaries of the trust.

3. Charitable planning. Does your estate plan include provisions for the benefit of charities? Depending on your overall goals and assets, it may be beneficial to leave a traditional IRA to a charity. Assets transferred to charity pass estate and income tax-free. For estates over $5.34 million (2014), IRAs are subject to 40% estate tax, and of course distributions from a traditional IRA would otherwise be subject to income tax.

In addition to the changes noted above, our tax attorneys review several tips when preparing for an early retirement. One thing you can do to ensure your retirement accounts are structured and working in your best interests is to maintain regular reviews with a tax attorney or Certified Financial Planner. Take a short time annually or bi-annually to learn if you are taking advantage of every possible tax break, contributing as needed, and moving toward your personal retirement goals.