It never occurred to me that a beneficiary of a life insurance policy or a retirement account could choose not to take the money. As a financial advisor and insurance agent, I found that most people were more concerned about having resources than giving them away. However, I did learn that sometimes beneficiaries may not want or need the money. In these cases the beneficiary can choose to decline payment and allow the money to move on to the next-in-line beneficiary or beneficiaries.
There are a variety of reasons why one beneficiary may wish to defer to other named beneficiaries. Please click here to learn more about disclaiming benefit in a retirement account.
Until next time. Debra Hadsall
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The Roth Individual Retirement Account (IRA) became available in 1998. It was named after its legislative sponsor, William V. Roth Jr., a Republican senator from Delaware. The Roth IRA was part of the Tax Relief Act of 1997. Sometimes we let the words for investment terms roll off our tongues without really knowing what they mean. This one is easy, it was named after someone who saw a need for an investment which had the potential of remaining tax-free during both the accumulation (adding to it) or distribution (taking money from it) phases. Of course there are rules to make that happen. As the saying goes, there is no free ride.
First, the money contributed to a Roth IRA is called after tax money, meaning the investor already paid taxes on it. Second the money needs to conform to a few rules to avoid paying taxes. I like the simple way an investment firm, Invesco, has explained it. Please just click here to learn more.
Whether we like it or not, investors often start with the long-range plan of investing money and leaving it there until age 59 1/2 and later and then life catches up with them. A recession hits, a job is lost, a major medical expense is incurred, a business fails, or some other major financial need comes along. Sometimes the investor is looking over all of her or his investment accounts to figure out how to best manage a short-term situation by accessing retirement accounts. Yes it could and has happened to investors, maybe even to you.
The information in the link is very useful as you work with your financial professional to sort things out. It is best to make an informed decision and be aware of the consequences so you can plan on them.
Until Next Time
Please remember, this is a short overview and questions relevant to personal finances and specific to the individual should be addressed to an appropriate professional to ensure that the situation has been evaluated carefully and appropriately.
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Not certain what baby steps have to do with the newly announced myRA plans? In my opinion, lots! We all have to start somewhere and grow from there! So many people get so intimidated with the top, they don’t take the first small step.
As someone who was a financial advisor and registered representative working with both experienced and first-time investors, I am excited about this interim step. Very encouraging! More next time about how I came to this conclusion.
Until then, I encourage you to click here to learn more!
To purchase my workbook, Financial Freedom Party for Women®, A Little Book about Money for Women, please click here.