I received an eye-opening email that I wanted to share with you.
Reprinted with permission from Pelayo (Peter) Garcia
mylegacygroup.com
Most people plan on leaving their IRAs or 401(k)s to their spouse when they die. While this is the right thing to do (and in some states the legal requirement), it can come at a hefty price. If a spouse dies while taking RMDs (Required Minimum Distributions), the surviving spouse now has to continue to receive those RMDs, only there’s one catch. Because this person is now single, they no longer have the benefit of the “Married, Filing Jointly” tax status. As a single person, tax brackets ratchet up much more quickly. So, in some cases, those RMDs, when added on top of the surviving spouse’s current taxable income, may push them into a much higher tax bracket.
This scenario highlights the importance of repositioning assets into tax-free accounts that aren’t subject to taxes and that don’t have RMDs. To learn more about the implications of leaving your IRA to your spouse, read this article on thinkadvisor.com.
America’s Debt – Learn About It
The link above leads to an article sighting David M Walker as the source of this information. Mr. Walker, I learned, served as comptroller general of the United States and head of the Government Accountability Office from 1998 to 2008.
I followed the rabbit down this hole further and learned that Mr. Walker is now the president and CEO of the Peter G. Peterson Foundation.
“What is that?” you may ask….
The Peter G. Peterson Foundation is a non-partisan organization dedicated to addressing America’s long-term fiscal challenges to ensure a better economic future.
Stay safe everyone!
– Liliana L Guarino
