this issue we take a look at the upcoming $150
billion economic infusion that Congress is working
on along with a quick primer on IRA/401k beneficiary
following information is for information only
- please consult with your tax or legal professional
The Emergency $150 billion stimulus package:
mentioned in the last newsletter the Federal Reserve
is doing all it can with monetary policy to prevent
a collapse of the economy and now the government
will do their part with a stimulus plan. Although
the plan is still being debated in Congress, here
is what the folks at Kiplinger Tax are predicting:
of $1200 for married and $600 for single.
with children under 17 will get an extra $300
Incomers won't get checks! Phase out will
begin at $150k for marrieds and $75k for singles.
businesses will be able to expense $250k of
assets instead of depreciating them.
businesses can also look for a bonus first-year
depreciation of 50% for purchases in 2008
that aren't expensed.
We should hear something from Congress by the
end of this month. Just don't look for your checks
IRA/401k Beneficiary options:
you know that beneficiaries listed on a IRA or
401k supercede what you may have in your Will?
IRA's and 401k's are very similar to life insurance
in how they pass to a beneficiary. They generally
move outside of probate, which is the legal process
of settling an estate.
may have heard of the term "stretch"
IRA. This is simply leaving an IRA intact as a
tax deferred vehicle to a beneficiary so that
it can grow and compound for many years.
should you care?
you fail to have beneficiaries properly notated
on an IRA or 401k account the entire account could
be distributed to your estate leaving a nasty
tax bill and the inability of beneficiaries to
take advantage of tax deferred growth. The flip
side is that default beneficiary options in your
IRA paperwork may distribute the account differently
than you planned in your estate.
should you do?:
sure you have a designated beneficiary ( a living
person) on your account. Even consider secondary
you have a non-designated beneficiary such as
a trust, be careful that the trust satisfies
certain special rules that allow for stretch
distributions based on the life of the oldest
with your 401k provider to see if they allow
non-spouse beneficiaries the ability to roll
proceeds into an inherited IRA versus taking
an immediate taxable payout.
you inherit an IRA make sure that the account
maintains proper titling. The IRS is very picky
about the wording. (this applies to non-spouse
importantly make sure when setting up your estate
plan that you make your attorney aware of your
accounts and beneficiaries. This could save your
family taxes and frustration in settling the estate.