John Piershale joins Piershale Financial Group

Earlier this month, we were pleased to announce the recent hire of John Piershale, a wealth advisor and Certified Financial Planner™, to the firm. An industry veteran, John joins us with over 20 years of experience and held a previous post at LPL Financial.

John will be responsible for expanding his client base, overseeing the financial planning needs of current clients nearing or in retirement and contributing to the firm’s seminar series, which typically cover retirement planning concerns and investment topics.

Receiving his certified financial planning designation in 2007, John also holds the series 24, 7, 66, and 63 licenses and is a retirement plan consultant.

A view of Piershale Financial

We welcome John to our firm and are thrilled to expand our deep bench of trusted professionals. We know he will be an integral part in offering our clients exceptional services and providing strong plans to help them meet their financial goals. 

A Potential Tax Trap for Heirs

A disadvantage of retirement accounts is that they cannot be re-titled into a trust account. Doing so will cause immediate taxation of the entire account. Therefore, there is no estate planning document that directs the distribution of retirement assets. Instead, this is done by a beneficiary election form that often names a different heir then is named in the trust document, which causes serious problems for the heirs. 

To complicate things further, different types of retirement beneficiaries are subject to different IRS rules. For example, children are not allowed to roll the parents IRA over to their own IRA, but can establish another tax-sheltered account called an Inherited IRA.

Michael talks Inherited IRAs on Fox Business

Using trusts as beneficiaries can subject the retirement money to trust tax brackets in some states, which can trigger significantly high taxes. Leaving money to a charity through a retirement account beneficiary form can create powerful tax savings for other heirs since the charity gets retirement money tax-free, whereas heirs that are named persons do not.

Coordinating beneficiaries with estate plans is an important step toward successfully passing money to heirs with minimum tax consequences. 

Inherited IRAs Provide Heirs Shelter from a Tax Storm

An inherited IRA offers non-spouse beneficiaries shelter from a potentially large tax burden. The only person who can take a deceased persons' IRA and put it in their own IRA is a surviving spouse. Non-spouse beneficiaries, like children, cannot.

Non-spouse heirs have two options. They can cash out the IRA and pay the taxes, which could cause a huge tax loss, or the government will allow them to establish what is known as an inherited IRA. An inherited IRA protects the money from tax, but the heir is required to take a small taxable distribution every year - resulting in a smaller tax burden.

The Piershale team

When using an inherited IRA strategy, you must keep these key factors in mind:

• The deceased IRA owners' account needs to be re-titled into an inherited IRA by September 30 of the year after the person passes away. The first distribution has to be taken by December 31 of that year.
• The IRA custodian is required to re-title an inherited IRA for non-spouse beneficiaries by the above deadline, but is not required to contact the non-spouse heir to take out the first distribution by the December 31 deadline. If this deadline is missed, the heir will be subject to a 50 percent penalty. 
• If the deceased retirement plan owner leaves money in a company plan such as a 401(k) until death, the non-spouse heirs do have the right to transfer it to an inherited IRA. However, the responsibility to transfer and re-title it by the September 30 is now that of the non-spouse heir.

Check back to our blog for continued coverage on IRA-related topics.

Piershale Financial Group hosting seminar to share IRA strategies

On July 9, 10, and 11, Piershale Financial Group hosted a seminar workshop that reviewed retirement strategies and how to properly protect assets to solidify a secure retirement.  With new tax laws and distribution rules, we understand that clients can have a challenging time in transferring any wealth. With that in mind, our workshop highlighted ways to successfully determine the beneficiary of an IRA, the ins and outs of inherited IRAs, how to reduce income taxes by allowing the beneficiary to stretch distributions, and much more. 

Before clients take any action in passing wealth, we stress the importance of understanding all rules and laws connected with inherited IRAs. While it can be complicated, it’s vital to be knowledgeable in this area so that plans can be streamlined and your heirs will not suffer any financial consequences. 

We host a number of seminar series throughout the year, so check back to the blog soon as we will announce our upcoming workshops.