When Deferring Distributions is Not a Good Idea

In previous posts we have discussed the unique characteristics of defined contribution plans (such as profit-sharing plans and 401(k) plans) and IRAs. We noted that a person is usually better off delaying distributions from a defined contribution plan or IRA as long as possible.

There are some situations where deferring distributions is not a good strategy. A few of those situations are described below. While there are other situations where deferral is not beneficial, the following exceptions warrant special attention. Read More...

Five Traits of Retirement Plans (Traits 1-3)

Last week we discussed five traits of 401(k) plans, profit sharing plans, and IRAs. We need to keep these traits in mind to maximize the economic benefits of these assets. These traits come to the forefront when we are doing estate planning. This week we discuss three of the five traits and their impact:  (1) plan income grows tax free, (2) plan distributions carry an income tax liability, and (3) there are required plan distributions. Read More...

Five Traits of Retirement Plans

For many people, an interest in a retirement plan, such as a profit-sharing plan, 401(k) plan, or individual retirement account (IRA), is their most significant asset. Planning for these assets is a real challenge.

The complexity in this area is monumental. There are many different types of retirement plans. The retirement plan that we are focusing on is sometimes called a “qualified defined contribution plan” or, popularly, a profit sharing plan or 401(k) plan. An IRA is a similar type of plan for purposes of discussing distributions from the plan. Note, however, that a Roth IRA is subject to a different set of rules than what is set out below. Read More...

Aging with Grace: Who Will Take Care of Me?

Many people will grow old and become disabled so that they can no longer care for themselves. People in this situation frequently rely on a spouse or child for care. However, some people won’t have a spouse or children. For other people, the spouse may have passed away or be too infirm to provide assistance. Children may not live nearby or may be unable to help. Read More...