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Estate planning for a happy retirement

On Behalf of | Jan 12, 2023 | Estate Planning |

There’s plenty to think about as you get ready to retire. It’s a crucial time to make sure your estate plan is in fully order and properly set up to distribute your assets to your Pennsylvania beneficiaries once you’ve passed on.

Review your will and employer plan accounts

You will is one of the most rudimentary things on your retirement estate planning list. It can be basic, but make sure you have one and that it’s valid.

You might also have retirement plan accounts like a 401(k) or IRA. Upon opening your account, you likely picked someone as your beneficiary. Depending on how long ago that was, you might not remember who you listed as your beneficiary. When you’re getting ready to retire, it’s a good time to verify that the person you’ve selected is who you really who you want to inherit the assets.

Ensure that your financial information listing is organized and comprehensive. Once you pass away, your loved ones will have enough to deal with. You can make things simpler by organizing your finances into a packet or file that they know how to access.

Minimizing the tax burden of you and your beneficiaries

There are a few ways you can lower the taxes on your estate. A trust and Roth assets can both help with this.

This estate planning option tends to be more on the intricate side, which is because of the level of control it affords. You can designate a corporate trustee to handle the administrative aspects of your estate, and you also get a greater amount of privacy.

Another option is to convert your assets from a traditional retirement plan into a Roth IRA. One significant advantage of Roth assets is that it offers a way of avoiding required minimum distributions. Since this type of IRA isn’t subject to RMDs, it means that the assets will continue to grow up until the point at which they are transferred to your chosen beneficiaries.

Your heirs will still be subject to required minimum distribution. However, provided that the account had been open for a minimum of five years, those RMDs will come with the benefit of being free from taxation.