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Neither Snow Nor Rain Nor Heat Nor Gloom Of Night Will Make Us Correct Spelling Or Grammatical Errors
(Sprightly Commentary That Is Not Legal Advice!)

I have been living in a family home, caring for a parent and grandparent for 19 years. Can I get compensated monetarily?

In 2003, I received a phone call from my mother in distress, stating she would have to put my grandmother in the nursing home because it was too much for her to take care of. I liquidated my assets, relocated, and moved into my grandmother’s home till she passed. A few years passed, my mother’s husband died, and I was asked to move into her home to help take care of the property. She was diagnosed with cancer, so it was assumed my responsibility to carry on caregiving. I have never been paid for service or compensated. I have not paid rent. By law can I get financially compensated?

Virtue Had Better Be Its Own Reward

Are all good-hearted people puddin’ heads? Surely not! But what person with common sense would abandon their own path in life to serve family members? A kind and generous person, of course. Kindness and generosity are wonderful traits. But so are practicality, prudence, and planning.

An individual sacrificing their own life choices can be truly noble. At least at the beginning. Our letter writer is now learning a bitter 20-year lesson. Caring for grandma and mom does not contribute to the Individual Retirement Account. Nor does it help you with Social Security. Last I checked, the Mom & Grandma Pension Fund was also out of business.

“I have never been paid for service or compensated.” What?! Do you wonder what our writer has been doing for “spending money” these last 20 years? Me too.

Will this story have a happy ending? Do not count on it.

“By Law Can I Get Financially Compensated?”

No. Not a brass farthing. Not a penny. You care for a loved one. Why? Because you love them. Did you do it for money? No. You did it for love. And the Law will hold you to it. You cannot convert a love relationship into a commercial relationship. When you care for a loved one, the law presumes that you are doing so because you love that person. End. Of. Story.

And if Mom or Grandma does pay you? Medicaid will whack them with a PENALTY when they need help with long-term care. Unless you meet the stringent Medicaid requirements for a personal care contract. Which you will not meet because you did not even know that there were such things as Medicaid Personal Care Contracts.

When you care for your parent or grandparent, be sure to have a contract. Your friendly, neighborhood elder law attorney can help. Maybe you can avoid Medicaid penalties. At least you’ll get paid. Eventually. The contract must be in writing. The contract must state the terms of the agreement. The contract must be signed, sealed, and delivered before the services are provided. The contract cannot be signed via Power of Attorney when the caregiver is also the Agent under the Power of Attorney.

But you didn’t do that this time. Better luck next time! Would it be a bad idea to talk with an elder law attorney?

What’s Next?

Maybe your siblings will let you stay in the house. They often do. Maybe your siblings will evict you and sell the old homestead. They often do. You will get your piddling share. Good luck living on those crumbs. Occasionally, brothers and sisters may give you more than an equal share. And that’s nice. But can you count on the generosity of your overworked, underpaid, and extremely busy siblings? Siblings who have bills of their own? You decide, but I doubt it.

But I Want To Take Care Of My Loved Ones!

If you really want to take care of your ailing loved ones, you are in a shrinking minority. Fewer and fewer people are motivated by pure love or guilty obligation anymore. Not so long ago there was a “sandwich generation”. Trapped between caring for parents and caring for little kids, the sandwich generation did double duty. Such family service was expected. Caring for older relatives was assumed. Having kids was no excuse. And spouses offered at least lukewarm support.

Those days (in my experience) are gone. COVID accelerated the process, but it was already happening. Paid care is the way we do it today. Can you get compensated? Yes if you follow the 3 P’s: Practicality, Prudence, Planning. Your elder law attorney can help!

I have a question about Medicaid requirements for my mother who is likely going to assisted living in the near future?

My mother is 81 and psychiatric. She recently became ill… The evaluation of her so far indicates that she’s going to need 24 hour care. She is a widow… Her income level is and always has been under the threshold to qualify for Medicaid (currently $2392.81) and the only other asset she has is her house. I am joint on her checking and savings account as I have been handling all of her bills for the last five years or so. At least half the 115 thousand miles that I have on my vehicle, have come from caring for her, including picking up and administering medication’s, doctors appointments, groceries, meals and so forth. I have paid for expenses in those cases from her account as required. Given that her income level is under the Medicaid threshold regardless , is Medicaid still going to potentially penalize and disqualify her from assisted living?

Who Says Kids Don’t Care? Oh, That Was Me…

Two letters from loving, caring, self-sacrificing kids. Gives you hope. Restores your faith in human nature. And looks like this child caregiver steered clear of the hazards.

2023 Medicaid Income Limit: $2742/Month

There is no Michigan income limit for skilled nursing home Medicaid. Does not matter how much income you have, you can qualify for skilled nursing home care, so long as the care costs more than your income.

There is a Michigan income limit for at-home care and for assisted living care. In 2023, that limit is $2742 per month. Before deductions for Medicare or taxes or insurance.

So. If your gross monthly income is greater than $2742, Medicaid will only pay for skilled nursing care in a skilled nursing facility, i.e. a nursing home. That means Medicaid will not pay for assisted living or at-home care such as the Program of All-inclusive Care for the Elderly (PACE). Our writer’s mom qualifies for assisted living Medicaid, on the income test, for Medicaid. That is because $2392.81 is less than $2742.00. If mom’s gross income was more that $2742, there is no way for mom to qualify for assisted living or at-home care Medicaid. In Michigan. NOTE: In almost all other states in the USA, folks can create a “Miller Trust” or “Qualified Income Trust” to reduce their income. This allows them to qualify for Medicaid benefits and stay home. Or go to assisted living. But not in Michigan. Too bad. So sad.

Income Looking Good… What Else Could Go Wrong?

If mom has given you money, that is a problem. If you have used mom’s money to pay mom’s expenses, that is NO problem. What has me worried (or at least curious) is your statement:
At least half the 115 thousand miles that I have on my vehicle, have come from caring for her, including picking up and administering medication’s, doctors appointments, groceries, meals and so forth. I have paid for expenses in those cases from her account as required.

Many times children caregivers will spend their own money on mom’s groceries, meals, and so forth, then get reimbursed by mom. It does not matter than you took notes or saved receipts. That method creates divestment penalties. That is bad. The better way is to use mom’s debit card or check book to buy her stuff. It is very clear that when mom’s money is used to buy mom’s stuff, there is no problem. But.

What if mom’s money is used to buy stuff for the child caregiver? That is bad. That is a divestment. That creates a penalty period. How many meals were for mom? Were the caregiver’s groceries purchased with mom’s debit card? Mom paid for gasoline. Was all the gasoline used in pursuit of mom’s errands? These are the sort of awkward questions that the Medicaid caseworker may raise. What if the answers are unsatisfactory? Mom will be penalized. Always a good idea for your super expert elder law attorney to take a sharp-eyed look at mom’s Medicaid application before you submit it. And the best bet is to get assistance every step of the way.

Avoid Nursing Home Poverty

You can get long-term care benefits without going broke. Medicaid wants you broke. But you do not have to accept what Medicaid wants. You can protect what you have earned. Here’s how:

How Medicaid Works
What If You Give Away Your Stuff?

What if you give away your stuff and then apply for Medicaid benefits? Medicaid will say, “We will not help you. You had stuff and gave it away. And so we will not pay.” This is called the “Penalty Period.” Medicaid will excuse itself for a period of time. The more you gave away, the longer Medicaid will not pay. Right now, for every $10,000 you give away, Medicaid will not pay for a month. Give away $120,000, Medicaid will not pay for an entire year! But then Medicaid will pay.

In the meantime, while Medicaid is not paying, the nursing home is suing you. And your kids. And your friends, And your first-grade teacher. And anyone else you gave stuff to. You thought you could keep the house? Ha-ha. You thought you could keep an automobile. Yuk-yuk. Whoops! Funny thing, though. What if you gave away your stuff more than five (5) years ago? What if sixty-one (61) months ago you gave all that stuff away? Then you applied for Medicaid? Things are different. Now Medicaid does not care that you ever had that stuff at all. Does not matter. So perhaps you should give all your stuff away. Right now. To the kids. Your neighbors. Your first-grade teacher. Then wait for five (5) years. And if you ever need long- term care after that, no problem! Medicaid does not care that you had that stuff and gave it away. Great Plan!

By now, the sharpest knives in the drawer have spotted the problem with this brilliant approach, right? If you give your stuff away, then you have no stuff. And you like your stuff. What to do?

What If You Give Away Your Stuff Without Giving Away Your Stuff?

How can you give away your stuff without giving away your stuff? By using a particular kind of trust, that’s how. For Medicaid purposes, you gave your stuff away. For federal tax purposes, state tax purposes, common sense purposes, you did not give your stuff away.

The IRS doesn’t think you did anything when you put your assets in this type of trust. Medicaid says you “divested” those assets. Medicaid says you gave those assets away. Medicaid starts the Five-Year Clock. Five (5) years after putting those assets into that trust, Medicaid will not count those assets as yours. And you will qualify for the Medicaid benefits you have paid for. Without sacrificing your lifesavings, cottage, other stuff.

Why Should You Want To Qualify For Medicaid Benefits And Keep Your Stuff? Why? Do you like paying for the same thing twice?

Are you opposed to getting any return on your tax dollars? Does the government know what to do with your money better than you do? Would it be dreadful to receive the government benefits you’ve paid for? And to have additional lifesavings to purchase additional goods and services? Is it awful to get the same deal from the government that irresponsible folks get? Would you prefer to be flat, busted broke and forced to go to a nursing home than to supplement at-home Medicaid with lifesavings to remain at home? Are your kids and grandchildren so undeserving and ungrateful that you’d rather give your money to the government?

This Is Too Good To Be True! Tricksy Stuff Like This Never Works For Regular Folks!

Plus, It Must Be Wrong Or Immoral Or Something Else That’s Bad Or My Planners Would Have Told Me All About It! And What If I Move Out Of State? And Give Me A Minute And I’ll Think Of Something Else…

On February 8, 2006, Congress overhauled the Medicaid system. Congress replaced 50 states going in 50 different directions with some general principles that apply to everybody. Seventeen years ago, I was shocked when this happened. The Medicaid landscape was rewritten, much to the distress of our long-term care clients. Tools and techniques that had been proven reliable were wiped out. But there was a silver lining to this dark cloud of Medicaid reform.

No longer did it make sense to wait-and-see. The environment was different. Now we had some assurance that a Michigan plan could work in Florida. Or Texas. Or South Carolina. But not California, nothing works in California.

Not only did we have a legal structure that worked from coast to coast, but we could also rely on that structure to be stable. And so, it has proved. Over the last 17 years, thousands of these LifePlanning™ trusts have been implemented by regular folks. And they have worked. Every time. Saving millions of dollars. For regular folks. To maintain dignity. To preserve families. To keep the promise that hard work, saving, planning, and doing the right things will have good consequences for you, your spouse, your family.

For every Medicaid application involving these trusts, we submit a full copy of the trust and all the supporting documents. Total disclosure. Candid honesty. Written evidence. Full documentation. This stuff works because we scrupulously, thoroughly, exhaustively comply with every law, rule, precept, and policy.

Going broke is a choice. Your choice. It is not chance, bad luck, or misfortune.

Why Don’t You Deserve A Little Payback For All The Taxes You Paid In?

Why Do You Want To Spend Your Last Nickel On Long-Term Care?

Why Shouldn’t The Government Spend Your Money For You?

Traditional estate planning is concerned with avoiding probate, saving taxes, and dumping your leftover stuff on your beneficiaries. After you die. Nobody cares what happens to you while you are alive. How does that help anyone? Stupid.

Traditional estate planning fails because the overwhelming majority of us will need long-term skilled care. 70% of us. For an average of 3 years. And we will go broke paying for it.
Is it surprising that thousands of recreation properties: cottages, cabins, hunting land, are lost to pay for long-term care? Why is your estate planner hurting you and your family? It is evil intent? Or stupidity?

LifePlanning™ defeats Nursing Home Poverty. Keep your stuff. Get the care you have already paid for. Good for you. Good for your family. Good example for society,

When my mother suffered from the dementia which led to her death, over 10 years ago, their estate plan preserved their lifesavings. Mom’s months in the nursing home did not mean Dad’s impoverishment. Dad spent the last years with security and peace of mind.

Is Now A Bad Time For A Real Solution?

Perhaps you think you already have an answer to this problem. Maybe you do not see this as a problem at all. It is possible that you do not believe in the passage of time or its effects on you.

Peace of mind and financial security are waiting for everyone who practices LifePlanning™. You know that peace only begins with financial security. Are legal documents the most important? Is avoiding probate the best you can do for yourself or your loved ones? Is family about inheritance? Or are these things only significant to support the foundation of your family?

Do you think finding the best care is easy? Do you want to get lost in the overwhelming flood of claims and promises? Or would you like straight answers?

Well, here you are. Now you know. No excuses. Get information, insight, inspiration. It is your turn. Ignore the message? Invite poverty? Or get the freely offered information. To make wise decisions. For you. For your loved ones.

The LifePlan™ Workshop has been the first step on the path to security and peace for thousands of families. Why not your family?

NO POVERTY. NO CHARITY. NO WASTE.
It is not chance. It is choice. Your choice.

Get Information Now. (800) 317-2812

The post Letters, We Get Letters, We Get Lots & Lots Of Letters appeared first on Carrier Law.

IRAs… Yes, This Will Be On The Test

WE’LL GET THERE WHEN WE GET THERE… DON’T MAKE ME STOP OR SO HELP ME…

WOULDN’T IT BE NICE IF WE WERE OLDER?
THEN WE WOULDN’T HAVE TO WAIT SO LONG
AND WOULDN’T IT BE NICE TO LIVE TOGETHER
IN THE KIND OF WORLD WHERE WE BELONG?

WOULDN’T IT BE NICE, BEACH BOYS

Financial security was probably not what The Beach Boys were singing about. But wouldn’t it be nice to have a few bucks of your own? A little independence? Isn’t that “the kind of world where we belong”? Maybe not completely relying on Social Security?

You choose from two types of Individual Retirement Account: Traditional or Roth. Traditional IRA, you deduct contributions when the money goes in and pay income tax on distributions when the money comes out. Roth IRA, you pay tax on contributions when the money goes in and do NOT pay income tax on distributions when the money comes out.

Concerned about skyrocketing income tax rates? Roth IRA for you! Want to dump more money into the account now and worry about taxes later? Traditional IRA at your service.

How to make it happen? Middle class workers and savers (that’s you) have been pumping money into tax-advantaged accounts since the 1980’s. How much? Nobody seems to know for sure. Probably somewhere between 30 and 40 trillion dollars. And even today, that’s real money. So how can you get into the game?

You Must Have Earned Income

Only folks with “earned income” get to contribute to an Individual Retirement Account. Did you get a W-2? Then you have earned income. For sure. No question. “Safe Harbor.” But nowadays, in this “gig economy” many folks are getting Form 1099s for earned income. Hello UBER drivers! Earned Income includes wages, salaries, commissions, self-employment income, taxable alimony. Earned Income does not include rent, royalties, annuity payments, pension, deferred comp.

How much can you contribute? All of your “earned income”… up to the contribution limit. For 2021 (no change from 2019 or 2020) the contribution limit is $6000, $7000 if you are 50 years old or more.

But If You Have Too Much Earned Income — No Roth For You!

You worked your butt off. Income tax biting hard. But you see even higher taxes on the horizon… Wouldn’t it be nice to dump some dough into a Roth and not worry about those higher taxes? Obviously. But you poor sap… if your income is over $124,000, your contribution is limited. And if you make more than $139,000, you are skunked! No Roth at all! Really? Nope…

Too Much Earned Income and Still Get the Roth? How Can This Be?

You put in the overtime. You worked a second job. You sold GRIT, greeting cards, and flower seeds door-to-door. Too much income! You cannot have a Roth! Or can you?

You paid the income tax. You are not eligible for a Traditional IRA income tax deduction. You are not eligible for a Roth. Now what?

Your income is “too high” for a Roth. (Hello doctors, nurses, foremen, engineers!) But you can still make contributions to a Traditional IRA. Taxable contributions. Contributions that are NOT tax deductible. How much can you contribute? Same as anyone else, see above. The difference is that you cannot take an income tax deduction for those contributions.

OK. So now you put the maximum leftover money into a Traditional IRA. “How does that help with the Roth?”, you ask. Good question. The answer is that you can convert a Traditional IRA that was established with taxed money into a Roth IRA. You can even convert untaxed IRA money into a Roth, if you pay the income tax. You can do this…whenever you want.

“Allowable conversions. You can withdraw
all or part ofthe assets from a traditional
IRA and reinvest them (within 60 days) in
a Roth IRA. The amount that you withdraw
and timely contribute (convert) to the Roth
IRA is called a conversion contribution.”
IRS Pub. 590-A, page 27.

To Sum It All Up: You cannot establish a Roth IRA because you have too much income. But you can still establish a Roth IRA anyhow, despite too much income, if you take this extra step.

I told you this stuff was nuts. Believe me now?

I Do Not Work Outside the Home, But I want to Retire Too… Can My Spouse Contribute to My IRA?

Yes! Even if you do not work for money outside the home, your spouse can contribute on your behalf. Yay domestic partnership! Wedded bliss!

Just like your working-for-money spouse, you can put $6000 per year into your own IRA. And beginning when you are 50 years old, you can put an additional $1000 per year into your IRA. Pretty great!

Beware: All the same rules for income, retirement plans, contribution limits and so on apply to you as to your working stiff spouse. Sauce for the goose, sauce for the gander. Same rules apply to both. Including that Traditional to Roth Conversion thing that nobody can believe actually works. But does!

Can I Get Deductions for My IRA Contributions? Elementary My Dear Watson! If This Stuff Were Easy, Everybody Would Do It

RULE #1 You can never deduct contributions to a Roth IRA. Remember, the whole point of a Roth is pay tax NOW so no tax LATER.

RULE #2 You can always deduct contributions to a Traditional IRA, no matter how much income. Within the $6000 + $1000 limits. Unless you or your spouse are covered by an “employer retirement plan.”

If your employer sponsors a retirement plan, your IRA contribution will be limited or eliminated by the “Deduction Phaseout.” Limited or Eliminated. Depends on how much income you have. Same deal, but different limits if your spouse’s employer has a retirement plan. It gets complicated.

So, pick yourself up a copy of IRS Publication 590-A, Contributions to IRAs, for today’s numbers. Only 60 pages long, IRS Pub. 590-A is riveting reading. And if 590-A does not put you to sleep, may I suggest IRS Publication 590-B, Distributions from IRAs. A real page-turner! Sixty-six pages, that is…

Wondering if you are covered by an employer plan? Your W-2 Form has a box for that. If it is checked, you are covered.

You cannot deduct, but still want to contribute to your traditional IRA? File IRS Form 8606 with your tax return to fess up!

Changes in Tax, Medicaid, Business and Other Laws Make Lifeplanning™ a Necessity for Any Middle-class Family to Succeed

You have built a significant and successful life and family.

Of course, your success comes from hard work and talent. But continued success depends on how quickly one can respond to life’s changes.

And, as I am sure you are keenly aware, circumstances are putting pressure on the entire American middle class, and middle-class seniors in particular. I am referring, of course, to the frustrating jumble of COVID laws and executive orders, along with the trillions of social spending draining Medicare and Social Security trust funds. Not to mention today’s financial turbulence.

First, the infamous executive orders that required nursing homes to admit vulnerable seniors with COVID. Only 16% of Americans are over age 65. Yet according to the Centers for Disease Control and Prevention, this small group suffered 78% of all COVID deaths. The number goes to 94% when people over age 50 are included.

Hyper-inflation is already back. You are already paying double at the gas pump. I shudder to think what your heating bill will look like this winter.

With Congress and the President shoveling money out the door, how will Social Security and Medicare survive? You already know that their priorities are not your priorities.

Hence the necessity to recognize these new realities – threats, even – and act accordingly, by increasing awareness, effectiveness, and avoiding nursing home poverty. You can live your best possible life and still be justly proud of the legacy you leave.

LifePlanning™, of course, cannot be the only solution to all this, but it is definitely an important part of it.

And let me emphasize one highly relevant fact.

Pressed by the need to get legal advice and documents quickly and cheaply, a few seniors (and their kids) have started using some of the free resources available on the Internet. This “shortcut” may all too easily result in great financial and medical losses to the detriment of your wealth and health.

Quite an unnecessary risk, given the availability and affordability of a comprehensive, cost-effective, personalized solution like LifePlanning™.

The benefits of this approach are so clear and overwhelming that thousands of families and hundreds of millions of lifesavings have already been protected.

Nevertheless, I doubt if anyone in your family will appreciate its value and implications better than you.

Nothing is more compelling than evidence. Go to the website: www.davidcarrierlaw.com. A quick review will take only a few minutes.

If you like what you see, call our LifePlan™ Hotline at 800-317-2812 or email me at david@davidcarrierlaw.com for an online or live Workshop. In a very short time indeed, you and your family can verify the claims I have made.

Success in life has always depended on knowledge. Those who are better informed, or informed before others win for themselves and their families. That is really the overwhelming reason why LifePlanning™ is not just important but, I believe, essential.

Why not invest 5 minutes and see for yourself?
(800) 317-2812

The post I Want to Reture Some Day… Can I Contribute to an IRA? appeared first on Carrier Law.

USEFUL, WHO SAID ANYTHING ABOUT USEFUL? GOOD THINGS TO KNOW!

SPOUSE DIED: TRAGIC, UNAVOIDABLE TOO MUCH TAX ON IRA: TRAGIC, UNNECESSARY

YOUR SPOUSE DIED, LEAVING YOU AS BENEFICIARY OF A TRADITIONAL OR ROTH INDIVIDUAL RETIREMENT ACCOUNT.
WHAT CAN YOU DO? WHAT CAN YOU DO?

BASIC: All IRAs are held and managed by an “IRA custodian.” The IRS gives 3 options to surviving spouses. But your IRA custodian’s policies and procedures determine which of the 3 possible options are available to you.

OPTION 1:
LEAVE IT ALONE

Don’t Upset the Apple Cart #1. Keep the IRA Custodian in Place. Be treated as beneficiary, not spouse. Probably a bad idea. But not always…

Why You Might Be Beneficiary: Are you less than 59 ½ years old AND you need the IRA money right away? Avoid the 10% penalty tax on early withdrawals by taking required minimum distributions (RMDs) over your life expectancy starting now. Or you can wait and take RMDs when your spouse would have become 72 years old. If spouse was already 72, you must start the RMDs now. Payments are accelerated, but hey, you need the money now!

Downsides: When you die, your beneficiaries will not get the 10-year stretch-out of payments, but will be limited to whatever period of time was remaining for you. Also, the Supreme Court has held that IRA assets held for a beneficiary are not “retirement plan assets.” This means that if you were to be sued, the “inherited IRA” assets would be available to judgment creditors! That means you could lose the inherited IRA assets. But who then gets to pay the tax? Right! You. But you have no money because that bad ole judgment creditor took it all. Right again! Bad news.

More Bad News: A beneficiary- inherited Roth IRA must pay out RMDs, just like a Traditional IRA.

Bottom Line: Consider carefully. No “obvious” or “always” solutions.

OPTION 2:
ROLL TO YOU, BUT LEAVE WITH CUSTODIAN

Don’t Upset the Apple Cart #2. What if the current IRA Custodian is a whiz? Great service! Stunning Investment Performance! Returns Phone Calls! You like them, they like you. Don’t screw up a good thing. Roll it over. Let the IRA continue to dance with the folks what brung it. If they let you (but they may not!).

If the IRA Custodian allows, the account rolls over to your name. Your social security number, too. Your personal information substitutes for that of your deceased spouse. Age, children.
The 10% penalty if you take the dough before age 59 ½ applies. Traditional IRA: RMDs at 72. Roth IRA: No RMDs at all! And you have full “retirement plan” asset protection. Your beneficiaries may use the full 10-year stretch-out.
What if the IRA Custodian goes sour on you? Well, it is your very own IRA. So, you can change to another IRA Custodian as you wish.

OPTION 3:
ROLL OVER, ROLL OVER, SO THEY ALL ROLLED OVER…

Perfectly Clear Fresh Start! Create a new IRA account. With a new IRA Custodian. Roll the deceased spouse’s funds to this new account. As with Option #2, it’s just like a brand-new account. And who doesn’t like brand-new?

Modified Limited Hang-out. On the other hand… You are happy with your existing IRA Custodian. You do not want to be responsible for cutting down hundreds of trees for double the paperwork. A simple life and a happy one is your motto.

Stick with whom you know and direct the roll-over funds to your existing IRA. All existing rules apply. You simply increase the amount of money in your well-established Individual Retirement Account.

BY THE WAY…
CONTINUING CONSIDERATIONS OF CONCERN

1. The rules apply to Traditional IRAs and Roth IRAs. But you cannot use the roll-over alone to convert a Traditional IRA to a Roth IRA. Traditional to Traditional. Roth to Roth.
2. Revisit your beneficiary designations. Should you name individuals? Perhaps a Tax Advantaged Legacy Trust would be the best choice? Your LifePlanTM attorney can help!
3. Bad News: Choose Option 1 for an inherited Roth IRA, and you will have to take Required Minimum Distributions, just as if it were a Traditional IRA. Good News: Options 2 and
3. As a spouse beneficiary, you do not have to take any RMDs.
4. Mind the deadlines! Remember that failure to take a timely RMD distribution will result in a 50% penalty tax. Ouch!
5. Major changes to Traditional and Roth IRAs laws, rules, and regulations have occurred over the last few years. Many more can be expected. It’s not easy, so watch this space!

NON-SPOUSE LOVED ONE DIED: TRAGIC, UNAVOIDABLE
TOO MUCH TAX ON IRA: STILL TRAGIC, UNNECESSARY
YOUR MOM, DAD, BROTHER, SISTER, SAINTED AUNT, CRUSTY UNCLE, BEST BUDDY DIED, LEAVING YOU AS BENEFICIARY OF A TRADITIONAL OR ROTH
INDIVIDUAL RETIREMENT ACCOUNT.
WHAT CAN YOU DO? WHAT CAN YOU DO?

BASIC: All IRAs are held and managed by an “IRA custodian.” The IRA custodian’s policies and procedures determine which options are available to you.

No Stretch-out for You! The 2019 SECURE Act (so-called IRA “reform”) applies when the loved one died in 2020 or later. Previous law allowed IRA beneficiaries to stretch out their inherited IRA payments over their life expectancy. Government, however, likes to get its money sooner rather than later. (Why is it their money?!) Rather than wait to get bits and pieces over your lifetime, they want it now. So, new rule: Inherited IRA must be exhausted, fully withdrawn, emptied within 10 years.

Exceptions. If the IRS decides that you are: minor child of the owner; 10 years or less younger than the owner; disabled, or; chronically ill, special rules will apply and your mileage may vary.

AIN’T IT GREAT TO FIND OUT HOW THINGS REALLY WORK?
UNCOVER THE ELEPHANT!

Seems like we are surrounded by elephants… Each one cleverly disguised by the global investment industry, the legal profession, government, and others. But you can’t hide an elephant forever, no matter how hard you try. When you want to find out what is really going on… come on down!

Isn’t long-term care the biggest elephant in the herd? How can you get the straight story? Learn accurate information. Find out what you truly need to know.

Like most families you are busy. Lots of stuff going on. So, we make it easy. Get the information, insight, inspiration you need. To live your life. Make smart decisions. Cut through the fog. It is your turn. For you. For your loved ones.

NO POVERTY. NO CHARITY. NO WASTE.
It is not chance. It is choice. Your choice.
Get Information Now.
(800) 317-2812

The post Fun Stuff to Know and Tell — Individual Retirement Accounts appeared first on Carrier Law.

Things Nobody Told You… But Probably Should!

What If You Did Not Get Your Required Minimum Distribution?

Maybe You Forgot… Maybe The Company Screwed Up… Maybe It Was The One-Armed Man… Who Cares? What Happens Now?

You were supposed to take $2000 as a “required minimum distribution” from your Individual Retirement Account. For reasons that remain shrouded in mystery, you only got $1000. Now what?

The RULE: There is a 50% penalty tax on any shortfall. You were $1000 short, so the penalty tax is… $500. Ouch! And it doesn’t matter whose fault it was.

STEP #1: Fix the problem ASAP! As soon as you realize your distribution is short, take the distribution.

STEP #2: Report the Shortfall and Penalty. Use Form 5329 to report the shortfall and the penalty. You could pay the penalty immediately, but don’t. Go to STEP #3.

STEP #3: Plead for Mercy. They say it is easier to beg forgiveness than get permission. Probably right. IRS penalties can be waived or forgiven if there is “good cause.” So when you have taken the distribution, STEP #1. And filed your IRS Form 5329 to report the late payment and the penalty, STEP #2. Write a nice letter to the nice folks at the nice IRS explaining how none of this was your fault and probably due to COVID or something. Ask them nicely to just forget about the penalty. Maybe they will. Maybe not. But if you do not ask, you do not get. So ask. Nicely.

What If Dad Died Before Taking His Required Minimum Distribution In The Year Of Death?

Dad Died… He Did Not Take His Rmd For That Year… How Much Is The Rmd? And Who Gets It?

RULE #1: The Required Minimum Distribution is the amount Dad was supposed to take in the year of death.

RULE #2: Required Minimum Distributions are what the IRS calls “income in respect of a decedent” and must taken by the beneficiary of the IRA. The distribution Dad already received shows up on Dad’s last tax return. The remaining balance of the RMD goes to the beneficiary of the IRA. If there is no beneficiary or the estate has been named as beneficiary, then the RMD goes to the estate.

DANGER! DANGER! What if the RMD is not taken in the year of death, what with all the confusion and so forth? Whoops! There is a 50% penalty tax on any shortfall. Go to the previous question and file your IRS Form 5329, pronto! Also the letter where you ask to be forgiven the 50% penalty tax.

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