Catherine M. Censullo CPA
One Minute Tax Tip


DID YOU KNOW THAT IRAs HAVE TRANSFER AND OWNERSHIP LIMITATIONS THAT ARE DIFFERENT FROM YOUR OTHER ASSETS?

 

In Part I of the series on June 4th, we spoke about considerations in connection with your IRA beneficiaries. 

In Part II of the series on October 1, we spoke about the taxes and penalties that are unique to IRA accounts.

Today, in Part III of our series, we will address your limitations in making transfers and ownership changes while you are still living.

As you may already know, one of the things you need to consider when you are planning your legacy is the distribution of the assets in your estate. 

Many times it is beneficial to transfer assets during your lifetime, such as between a husband and wife or to other family members, while you are still living.

However, when you look at these considerations for your IRA assets, the rules are different.  Here are some of the points you should consider:

  • You cannot gift or transfer your IRAs during your lifetime.  (The one exception to this rule is for tax years beginning before January 1, 2014.   If you are age 70 1/2 or older, you may exclude from gross income a qualified charitable distribution that you make directly to a charitable organization not to exceed $100,000 per tax year.)

  • You cannot change the owner of your IRAs during your lifetime.  If you did, this would be considered a complete and total distribution from your IRA, ending your tax shelter of the funds.

  • You cannot transfer your IRAs to a trust during your lifetime. This would be the same as changing the owner, which would also be considered a complete and total distribution from your IRA account.  You don't want to get a big surprise of a huge tax bill when you file your income taxes.

  • You cannot own your IRAs jointly.  You can own your home jointly or your bank account jointly, but not your IRA account.

Make sure that when you are planning your legacy, you look at your IRA assets differently and address them in your plan.

If you have any questions or would like to understand how these issues may impact you, please do not hesitate to call the office at 914-997-7724 and set up an appointment.
 

 


Catherine M. Censullo, CPA
914.997.7724
catherine.censullo@cmcensullocpa.com

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