Retirement Planning

The prospect of retirement is something many of us eagerly anticipate. With careful and thorough planning, retirement can provide the opportunity to spend quality time with loved ones, explore new destinations, and engage in long-forgotten hobbies. However, retirement planning extends beyond mere calculations. A successful retirement plan involves a comprehensive evaluation of your retirement goals, available benefits, and existing estate plan.

Retirement marks the culmination of our time in the workforce. For those approaching this stage of life, the transition from an active career to retirement may seem daunting due to numerous variables. With the introduction of Social Security, the average life expectancy of a 65-year-old adult has increased by almost 50%. It is now statistically expected that individuals will enjoy nearly one-third of their adult life in retirement. However, the complexities surrounding retirement are many, including determining the optimal retirement age, retiring in a tax-efficient manner, and safeguarding retirement savings for yourself and future generations.

Retirement planning is not exclusive to individuals with high net worth; rather, every individual can benefit from a comprehensive plan. It is crucial to critically assess each individual’s retirement goals and options. At The Estate & Elder Planning by David Wingate we help you plan for your retirement years.

Our office provides guidance and develops personalized plans to assist retirees and those on the cusp of retirement in evaluating the available options from their retirement benefits. We help structure beneficiary designations, preserve benefits during your lifetime and for future generations, and identify tax-saving strategies for retirees and beneficiaries.

At Estate & Elder Planning by David Wingate, we aim to provide clarity by explaining your options, offering recommendations, and guiding you through the planning process. Our recommendations take into account the available benefit options for each retiree, the implications for beneficiaries, and a comprehensive framework encompassing income tax, inheritance tax, and federal estate tax. We adopt a holistic approach to retirement planning, seamlessly integrating these recommendations into each client’s overall wealth protection plan and long-term care plan. To help you achieve your retirement goals, our firm recommends a variety of planning strategies, including the use of accumulation and conduit trusts, strategic beneficiary designations, and informed benefit plan elections.

Frequently Asked Questions

1. What happens to my retirement plan when I pass away?

The fate of your retirement plan upon death depends on the specific plan you have. Typically, if you are vested and eligible to participate in an employer-sponsored retirement plan, you will be enrolled in either a defined benefit plan or a defined contribution plan.

• In a defined benefit plan, you receive a predetermined dollar amount at regular intervals (e.g., monthly) based on the plan formula. This is often referred to as a “pension” from your employer. Some defined benefit plans may offer the option of reduced payments during your lifetime in exchange for promised payments to your surviving spouse upon your death.
• In a defined contribution plan, you have an account balance rather than periodic payments. Examples of defined contribution plans include 401(k), 403(b), employee stock ownership plan (ESOP), and profit-sharing plan. You can deplete the account balance during your lifetime, and any remaining proceeds are transferred to the designated beneficiary upon your death.

1. Will my Last Will and Testament distribute the remaining balance of my IRA?

No, an IRA is considered a non-probate asset, meaning it passes outside of your Last Will and Testament. The distribution of IRA proceeds is determined by the beneficiary designations you have submitted to the IRA administrator.

1. What happens when I inherit an IRA?

The Secure Act, is a law that was enacted in December 2019 in the United States. The act introduced several changes to retirement planning and distributions, including the rules for IRA beneficiary distributions. Here’s how the Secure Act affects beneficiary distributions:

1. Elimination of the “Stretch IRA” for most non-spouse beneficiaries: Under the previous rules, non-spouse beneficiaries, such as children, could “stretch” the distributions from an inherited IRA over their lifetime, allowing for potential tax advantages. However, the Secure Act generally eliminates the stretch IRA provision for most non-spouse beneficiaries.
2. Introduction of the 10-year rule: Under the new law, for most non-spouse beneficiaries who inherit an IRA after January 1, 2020, there is a new 10-year rule. This means that the entire balance of the inherited IRA must be distributed by the end of the 10th calendar year following the year of the original IRA owner’s death. This can result in accelerated taxable distributions.
3. Exceptions to the 10-year rule: There are some exceptions to the 10-year rule for certain eligible designated beneficiaries, including:
   • Surviving spouses: Spouses who inherit an IRA can still treat it as their own and delay distributions until their own required minimum distribution (RMD) age or choose to use the 10-year rule.
   • Minor children: Children who are minors at the time of the original IRA owner’s death may be able to stretch distributions over their own life expectancy until they reach the age of majority. Once they reach the age of majority, the 10-year rule applies.
   • Disabled or chronically ill individuals: Eligible designated beneficiaries who are disabled or chronically ill may be able to stretch distributions over their lifetime.
   • Individuals not more than 10 years younger than the IRA owner: If the beneficiary is not more than 10 years younger than the deceased IRA owner, they may still be able to stretch distributions over their lifetime.
4. Impact on estate planning and tax strategies: The Secure Act’s changes to beneficiary distributions have significant implications for estate planning and tax strategies. It’s important to review and update your estate plan to account for these changes and consider alternative planning strategies to minimize tax burdens and maximize the benefits for your beneficiaries.
5. It’s crucial to consult with a qualified financial advisor or tax professional who can provide personalized guidance based on your individual circumstances and help you navigate the implications of the Secure Act on beneficiary distributions.

At Estate & Elder Planning by David Wingate, we are committed to providing personalized retirement planning services that align with your goals and priorities. We understand the intricacies of retirement benefits, tax implications, and estate planning, and we are here to guide you through the process. Contact us today to start planning for a secure and fulfilling retirement.

To learn more about estate planning and elder law, visit Estate and Elder Planning by David Wingate at www.davidwingate.com. For an Initial Consultation, call (301) 663-9230. We can assist you with powers of attorneys, living wills, wills, trusts, Medicaid planning, and asset protection. With office locations in Frederick, Washington, and Montgomery Counties, Maryland, we are here to provide you with peace of mind.

Disclaimer:

The information provided in this blog post is for general informational purposes only and should not be construed as legal advice. While we strive to provide accurate and up-to-date information, laws and regulations regarding dementia, estate planning, and elder law can vary by jurisdiction and may change over time.

The content of this blog post is not intended to create an attorney-client relationship between the reader and Estate and Elder Planning by David Wingate or any of its attorneys. It is always recommended to seek professional legal advice tailored to your specific situation from a qualified attorney.

The applicability of legal principles can vary based on individual circumstances, and the information provided in this blog post may not necessarily address all possible legal issues or concerns. Therefore, it is advisable to consult with an experienced attorney before making any decisions or taking any actions based on the information provided in this blog post.

Estate and Elder Planning by David Wingate assumes no responsibility for any errors or omissions in the content of this blog post or for the accuracy, completeness, or adequacy of the information contained herein. Any reliance on the information provided in this blog post is at the reader’s own risk.

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We encourage readers to consult with an attorney regarding their specific legal concerns and to obtain professional advice tailored to their individual circumstances. Each person’s situation is unique, and the information provided in this blog post may not be applicable to everyone.

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