Page 35 - Know-So Money, Hope-So Money, Retirement Secrets Wall Street Doesn't Want You to Know

Pass your IRA/401(k) to your spouse, children and
grandkids while maintaining its tax-deferred status

One of our favorite strategies is one we call an Individual Pension
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Account (IPA ). It lets you take a maximum amount of income while
you are alive, and leave 100% of your IRA to your heirs...tax free!

Taxes on qualified money can be as much as 40%. The primary taxes
are state inheritance taxes, income taxes, and Income Taxes In Respect

to the Decedent (IRD). That last is a fancy way of saying that if you
don’t pay the taxes while you are alive, your children will have to after
you are gone. And most often, at a higher rate.

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How does the IPA help?
Consider the example on the next page. Assume your IRA is worth
$250,000 and you are 70 ½ years old, and you are now forced to take
the required minimum distribution (RMD), whether you want it or not.
You may not realize that if you abide by the RMD tables as mandated

by federal tax statute, you will be forced to take the most income at age
93 when you are apt to need it the least. Then, when you do finally pass
it along to your heirs, they will be forced to pay IRD taxes on their
inheritance (and it can also raise the stakes for any other death taxes you
may incur).

Now, refer to the illustration of the IPA calculator on the next page.
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The first section in the calculator shows the impact of the IPA after
year one. Income with the Required Minimum Distribution (RMD) is
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$9,124, but the IPA provides $14,764 (61% more). This is enough to
cover the RMD taxes as well as any additional taxes on your Social
Security, so your tax issue is taken care of.

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