Income in respect of decedent, or IRD, is defined as the amounts of gross income not included in the taxable income computation for a decedent. It allows beneficiaries to obtain income tax deductions for federal estate taxes. This deduction though does not extend to state estate taxes.
Deductions from IRD are sometimes used to help offset double taxation from federal estate and income tax, although this only works for certain inherited assets. Here are a few things people should know about IRD.
The distribution code is “4” on the 1099-R.
Review Form 706 is used to find out how much federal tax was or should be paid by the decedent.
The federal estate tax without the IRA is equal to the value of the estate minus the value of the IRA.
The IRD deduction is equal to the actual federal estate tax paid minus the federal estate tax without the IRA.
When taking out money in future transactions, there has to be a calculation on the percentage of the deduction from the inherited IRA. The amount of deduction should be divided by the IRA amount included in the estate.
The only time an IRD deduction can be claimed is in the years a person took distributions from the inherited IRA.
The annual IRD deduction is equal to the distribution multiplied by the IRD percentage.
Barry Bulakites is one of America’s leading IRA experts, and is the co-founder, president, and chief distribution officer for Table Bay Financial Network, Inc. For similar updates, visit this Twitter page.
As one nears retirement, they must become more aware of the needed financial stability that comes with sound investment strategies. This involves examining the best options available to guarantee that one’s retirement portfolio will allow for peace of mind and various perks, from guilt-free shopping to traveling the world.
The first low-risk, high-gain option is P2P or peer-to-peer lending. This is an online investment that matches borrowers and investors in mutually beneficial loans. It is worth considering as among the primary investment choices because it often pays out higher interest rates than your typical stocks.
A good second choice is annuities, investment contracts between an investor and an insurance company. Annuities come in various forms and can either be variable or fixed, but usually come with a guaranteed return by a particular date. Though these often hinge on how the stock market fares, your contract may include a provision that limits downside risks.
Finally, you should look at real estate investment trusts or REITs. Here one invests in mortgages and direct equity positions from different properties. REITs pay dividends to their investors, yields that are often higher than what you stand to gain from stock dividends. This is a great option when the stock market is in decline, as they are not correlated with exchanges in stocks.
Barry Bulakites is a recognized innovator in the field of financial services. The president and chief distribution officer of Table Bay Financial Network, he is responsible for some of the industry’s unique platforms including America’s IRA Centers™ and America’s Tax Solutions™. More on Barry’s work here.
Retirement planning is the type of planning one does to be prepared for life once paid work ends. This includes not just financial conditions but all aspects of life, such as lifestyle choices given the newly acquired free time, where to live, and when to completely quit working. On the financial side, it means identifying sources of income, estimating expenses, managing assets, as well as implementing a savings program.
Government-sponsored retirement via Social Security and pension benefits, for instance, is facing issues that include an aging world population and fewer working-age individuals contributing to Social Security systems. Private pension plans aren’t immune to problems, too, with the real possibility of corporate collapses that can lead to employer-sponsored stock holdings getting wiped out.
Those who are planning to retire soon should have a checklist of things to do. This includes knowing when one can realistically retire, learning how medical care can affect one’s expenses, studying how Social Security timing will affect one’s income, making a plan for debt payment and management, and keeping one’s financial and lifestyle plans on track.
Thus there’s a need for effective retirement planning, whether in young adulthood (ages 21 to 35), early midlife (36 to 50), or later midlife (50 to 60). One needs to pay attention to one’s home and existing home equity loan; estate plan or what happens to one’s assets after death; tax efficiency, where most of retirement accounts are taxed as ordinary income tax; and insurance such as navigating the Medicare system.
As life tends to throw a curveball from time to time, it’s important to be flexible when dealing with changes, such as grappling with unforeseen illnesses.
Barry Bulakites is the president of Table Bay Financial Network and is a recognized innovator in the field of financial services. For similar topics, subscribe to this blog.
There are many attractive ads on TV that promote investment in self-directed IRAs. You might have even received solicitation letters for such. However, the IRS has come out with a notice to taxpayers of the need to take caution when dealing with some IRA investments, and many IRA owners now have questions.
The most important thing to remember is that the IRS does not review nor approve IRA investments. This is true for all types of IRAs. It cannot issue any statement that would make an investor think that an IRA is protected just because, say, a trustee or custodian has been IRS-approved.
Secondly, you need to guarantee that you are not getting into any prohibited transaction with your IRA assets. Prohibited transactions refer to transactions between an IRA and a disqualified person. This has been a prevalent issue with self-directed IRAs. So, whatever self-directed IRA investment type you want to pursue, find out first if it is coming from a reputable institution, as negligence could even lead to fraud.
All in all, the information above do not claim that self-directed IRAs are inherently bad. However, before moving your assets into it, or to an IRA LLC, ensure that you know all the facts. The best course is to consult first with a personal tax professional or an IRA-planning expert.
Barry Bulakites is co-founder, president, and chief distribution officer for Table Bay Financial Network Inc. He is a recognized innovator in the financial services industry, having been responsible for platforms that serve the exploding retirement marketplace such as America’s IRA Centers™ and America’s Tax Solutions™. For more on his work and interests, visit this Twitter page.
Saving up for the future, may it be far or near, can be a little difficult especially when there are no boundaries set for spending. Individuals who save up for their retirement as it nears find their savings insufficient for them to maintain the lifestyle they currently enjoy.
It is recommended that by the time a person retires, they must have a retirement savings worth $1 million to sustain oneself, yet most only get to save up about $5,000—an undesirable amount. Employees should not wait long before they start saving up for retirement. As the current workforce in America believes they should invest for retirement, only three-fourths of the population is doing the hard work for it.
It is best to start investing for retirement as soon as possible; begin saving the moment once employed. Doing so sets employees to a good start. This will lessen the load over the years of working non-stop and will build security as the years toward retirement draw near. The longer one waits, the harder it will get. If an employee plans to retire by the time they reach 67, by 35, retirement savings amounting to twice one’s annual salary must be attained.
Investing in one’s retirement may sound difficult, yet as one does it the soonest, the more attainable it will be. A person must decide and plan to save up for the far future to be able to sustain the lifestyle one enjoys.
Barry Bulakites is the president of Table Bay Financial Network and is a registered innovator in the field of financial services. He is responsible for some of the industry’s unique platforms serving the retirement marketplace, including America’s IRA CentersTM, and America’s Tax SolutionsTM. Find out more about Barry by clicking here.
Many taxpayers opt to prepare and plan their own taxes. While this would suffice for those who only have their W-2s to worry about or those with just a few assets, the rest should consider acquiring the services of a tax preparer. Because, more likely than not, they need professional guidance for managing their IRA, 401(k), and other assets.
Here are some of the things to check on tax professionals or institutions:
Qualifications: Federal regulations require all certified tax return preparers to register for a PTIN (Preparer Tax Identification Number), so those looking for tax services should check for it. Additionally, they could confirm whether the preparer is in good standing with the Better Business Bureau, state boards of accountancy for CPAs, and the IRS Office of Enrollment.
Service fees: There are tax preparers who take advantage of their clients by charging them based on a certain percentage of their refund. Clients should ensure that any refund due them is transferred to them directly, and not to the bank account of their preparer.
Auxiliary services: When choosing a tax preparer, one should obviously consider his wants and needs. But some preparers offer additional services for free, such as custodial reviews, annuity check-ups, IRA strategy guidance, and planning services.
Barry Bulakites is a renowned innovator in the financial services industry. One of the platforms he is responsible for is America’s Tax Solutions™, which specializes in tax, financial, and retirement planning. Read more about it by visiting this website.
A lot of professionals are skeptical about working with financial advisors, who are thought as mere salespeople of insurance policies, or hourly paid consultants. This undermines their real function, which is to assist individuals toward financial stability. Here’s how financial advisors work.
A financial advisor is a personal money planning partner. Together, they set realistic financial goals and think of ways to turn them into reality. For example, a millennial might want to start saving so he or she can retire at the age of 55. Financial advisors help them accomplish this by making a plan that will lead to the fulfillment of that goal.
Financial advisors also work as educators. It is part of their job description to help individuals understand their financial health and how they can make it better. Things like tax payments, budgeting, and saving are often involved in sessions with financial advisors.
While financial advisors clarifies financial decisions for others, it is still up to the clients to follow their advice or not. Not all financial advisors provide the same level of service, too, and it is always best to look for someone who understands personal needs.
Barry Bulakites is known in the financial world as an innovator and resource speaker. He is the president, chief distribution officer, and co-founder of Table Bay Financial Network, Inc. Visit this page to learn more about him.