[ahy-ruh] 
| a male given name: from a Hebrew word meaning “watchful.” |
| individual retirement account n. Abbr. IRA An investment account in which a person can set aside income up to a specified amount each year and usually deduct the contributions from taxable income, with the contributions and interest being tax-deferred until retirement. |
| IRA abbr.
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IRA
Is it a good idea to name my estate as the beneficiary of my IRA? Generally speaking, this is not advisable. If you name your estate as the beneficiary of your IRA, then the assets held inside your IRA must be distributed according to your last will and testament and the proceeds of your IRA will go through probate. Most IRA owners like to keep assets inside their IRA for the longest time period allowed by law, thereby maximizing the dollars that can be accumulated on a tax-deferred basis while also delaying the payment of income taxes for as long as possible. IRAs are subject to annual required minimum distribution requirements once the IRA owner reaches age 70 1/2. These requirements are based upon either the individual life expectancy of the IRA owner or the joint life expectancy of the IRA owner and his beneficiary. Because your estate has no life expectancy, there is no way to stretch out the period during which your IRA assets can remain inside your IRA and grow tax-deferred even if this is what your IRA beneficiaries want. Thus, if you die prior to age 70 1/2, naming your estate as your beneficiary, the assets held in your IRA will have to be liquidated and proceeds disbursed over a five-year period to the beneficiaries you named in your will. If your IRA was a traditional IRA, your beneficiaries will have to include every IRA disbursement in their taxable income for the year during which the disbursement was received. If your IRA was a Roth IRA, your beneficiaries won't owe any income tax on your IRA disbursements, but they will still be forced to withdraw your IRA assets by the end of the five-year period, whereas they could have kept your IRA assets inside of your IRA for many more years if you had named specific beneficiaries for your IRA. If you die after age 70 1/2, naming your estate as your beneficiary, your IRA beneficiaries will have to take annual minimum distributions from your IRA that are based on what the federal government's actuaries have determined would have been your remaining life expectancy if you were still alive, reduced by one for each year thereafter. From a financial planning viewpoint, the biggest disadvantage of naming your estate as the beneficiary of your IRA is the basic inability to stretch out the distributions from your IRA to maximize the buildup of value and delay the payment of income taxes, as described above.Stephanie G. Bigwood, CFP, ChFC, CSA, Assistant Vice President, Lombard Securities, Incorporated, Baltimore, MD |
Ira
citizen; wakeful. (1.) A Tekoite, one of David's thirty warriors (2 Sam. 23:26). (2.) An Ithrite, also one of David's heroes (2 Sam. 23:38). (3.) A Jairite and priest, a royal chaplain (2 Sam. 20:26) or confidential adviser (comp. 2 Sam. 8:18; 1 Chr. 18:17).
IRA
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