I recently took advantage of a discount at a chain store that applied to those of us who are age 55 or older. The cashier was shocked (shocked I tell you!) that I qualified and insisted on seeing my ID. I happily handed it over, with visions of future senior discounts dancing in my head. But, as we know, planning for retirement in our senior years involves a lot more than counting on discounts (whether we look the part or not). Complicated planning is involved, and simple mistakes may trip up our clients.
As Amiram J. Givon points out in his article, “Understanding IRA Prohibited Transactions” (p. 46), engaging in a prohibited transaction can completely derail an individual retirement account, causing the IRA assets to be deemed distributed and taxed as if actually distributed. On the bright side, however, it’s also possible to take advantage of certain exceptions in the law to help out during retirement years. For example, net unrealized appreciation, which is the growth in the value of employer stock while it’s held by a qualified retirement plan, is excluded from income in the year of distribution. “Capital Gains From Retirement Accounts,” by Christopher R. Hoyt (p. 37) explores this exclusion in more depth.
This month’s issue also includes a useful 20-point checklist for practitioners to consult when assisting clients who are near death. “Planning at the Eleventh Hour,” by David A. Handler and Kristen A. Curatolo (p. 14) details how you can help clients near the end of their lives achieve favorable outcomes for their beneficiaries and avoid missing valuable opportunities. And, if you’re looking for more information, be sure to sign up for a webinar that David and Kristen will be presenting on this topic, which will take place on June 2 at 2 p.m. (EST). Keep an eye out for registration announcements on our website and in our e-newsletters.