Question: I have an IRA annuity that I started taking lifetime income from in 2017. I’m going to be 70 ½ in 2019. Does this income count toward my Required Minimum Distribution or do I have to take a separate withdrawal?
Answer: The lifetime income payment counts toward your Required Distribution in 2019. Your RMD has to be taken in the calendar year in which you turn 70 ½, so you don’t have to wait until the actual month you turn 70 ½.
Any payments you receive in 2019 can be included.
Question: The stock market has been making me nervous. I feel like I should be doing something to protect my investments, but I don’t know what.
Answer: The first step is to understand the mix of your investments between stock funds and bond funds. Stock funds will grow your portfolio over time but are volatile, as we’ve seen. Bond funds, conversely, provide stability. Having a well-rounded, diversified portfolio attuned to your risk tolerance is the key to successful investing.
It allows you to weather the financial storms without feeling the need to jump in and out of the market. And this is a great opportunity to rebalance and “buy low” — don’t forget.
Question: I’ve always heard I shouldn’t name a trust as a beneficiary on my IRA, but I’ve never understood why.
Answer: If the beneficiary of an IRA is a “natural person,” i.e. a living, breathing person, then the IRS allows the beneficiary to stretch the withdrawals of this taxable asset out over the beneficiary’s lifetime. It saves many thousands of dollars in taxes.
A trust, however, has no such lifetime benefit, and trust tax rates are much higher than personal rates. There are ways to properly structure trusts to preserve the stretch rules for the beneficiaries, but it’s complicated. Make sure the attorney you work with is well-versed in this area.
Have Questions? Send your financial questions to Yvonne Marsh, CFP®, CPA at firstname.lastname@example.org, or submit them at www.marshwealth.com and she will review your question for possible inclusion in a future column.
Financial Planning & Investment Advisory Services are offered through Marsh Wealth Management, LLC, an independent investment advisor registered with the state of Tennessee. Yvonne Marsh is an Investment Advisor Representative of MWM in the state of Tennessee. Marsh Professional Group, LLC, is a TN registered public accounting firm and a separate legal entity from MWM. For a detailed discussion of MWM and their investment advisory fees, see the firm’s Form ADV on file with the SEC at www.adviserinfo.sec.gov