What should you do with an inherited IRA? Individual Retirement Accounts (IRAs) are quite popular. At the end of 2017, investors owned nearly $9 trillion in IRA assets, according to the Investment Company Institute, a trade association of U.S. investment companies. Given these numbers, it probably wouldn’t be surprising if you inherited an IRA someday. But what should you do with it? First of all, you’ll need to be aware of some basic rules. If your parent, or anyone other than your spouse, leaves you a traditional IRA – one in which contributions are typically tax-deductible and earnings can grow tax-deferred – you can transfer the money into an “inherited IRA,” from which you’ll need to take at least a minimum amount of money – technically called a “distribution” – each year, based on your life expectancy. These distributions are taxable at your regular income tax rate. If you’ve inherited a Roth IRA, you also must take these minimum payouts, but the amounts won’t count as taxable income, because your parents, or whoever left you the IRA, already paid taxes on the contributions that went into it. (To make sure you fully understand all the guidelines on distributions and taxation of inherited IRAs, consult with your tax advisor.)
It’s also important to understand how your inherited IRA will fit in to your overall financial strategy. Consequently, you’ll need to address the following questions. How much should I take out each year? As mentioned above, you must take a distribution of at least a minimum amount from your inherited IRA each year – if you don’t, you may be subject to a 50% penalty on the amount you should have taken. But you can take out more than the minimum. In deciding how much to take, you’ll need to evaluate a few factors. First, of course, is whether you need the extra money to help support your regular cash flow. It’s possible you have other pools of income from which to draw, and, in some cases, it may be advantageous for you to tap these sources first. Another consideration is taxes – if you’ve inherited a traditional IRA, the more you take out each year, the bigger your tax bill may be. Should I keep the same investments? Inheriting an IRA doesn’t mean you’re stuck with the original account owner’s investment choices. You can change the investments to align with your goals and risk tolerance, both of which may change over time. How does the inherited IRA fit in with my overall financial strategy? You’ll need to consider how your newly inherited IRA fits in to the “big picture” of your financial strategy. Are you adding redundancies? If you keep the inherited IRA largely intact, how will it affect your current investment mix? Could the added income from required distributions change your retirement calculations or even enable you to retire earlier? You may want to consult with a financial professional about these and other questions related to your inherited IRA. The person who left you an IRA worked hard for that money and thought enough of you to pass it on. Consequently, you’ll want to respect this inheritance – and get the most out of it for as long as you can. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Sexual abuse and domestic violence prevention efforts The heinous crimes of domestic violence and sexual assault have long-lasting impacts on victims, their families and our entire society. I strongly support continuing our state efforts to constantly review domestic and sexual violence in Michigan, keep lawmakers informed about the scale of the problem, and offer policy and funding solutions that will help combat these crimes and provide better outcomes for victims. In 2012, Gov. Rick Snyder issued an executive order renaming an existing state board as the Michigan Domestic and Sexual Violence Prevention and Treatment Board and adding sexual abuse and prevention to its mission. Public Act 281 of 2018 establishes the board in state law and requires it to advise lawmakers on the magnitude and nature of domestic and sexual violence and to recommend solutions. The new law builds on my efforts to help prevent the sexual abuse of children in Michigan. Erin’s Law allows schools to adopt age-appropriate policies and training addressing child sexual abuse and create a one-time task force to make recommendations on how to best protect children from sexual abuse. The law was named after Erin Merryn, a sexual abuse survivor from Illinois whose advocacy led to the passage of a similar law in her home state. I sponsored Erin’s Law to help protect every Michigan child from sexual abuse. The goal remains to stop all abuse by educating children about sexual abuse so they can recognize it and be empowered to report it. As part of achieving that goal, this expanded board will continue the important task of constantly reviewing our laws and programs to ensure we are doing everything possible to end sexual abuse and domestic violence. As always, I look forward to hearing your comments and feedback on the important issues facing Michigan. You can contact me at 517-373-6960.
Mid-year update This week I wanted to provide a mid-year update about my work to fight for taxpayers, families, seniors, students, and YOU. For taxpayers, I’m pleased to say we have reduced the state’s overall general budget spending while also paying down debt and tackling our state’s unfunded liabilities. Additionally, I was proud to vote for an income tax cut to help everyone keep more of their paycheck because, like you, I believe hard-working citizens and their families should keep more of what they earn. For families, we’ve worked hard to combat the opioid epidemic which has devastated lives and torn families apart. I backed solutions to stop abuse and increase access to treatment. Furthermore, we have worked to improve access and strengthen care for people who are facing mental health challenges. For seniors, I supported a solution to better protect people from consumer fraud by providing free credit freezes. I helped safeguard and increase funding for the important Meals on Wheels program because I believe homebound residents need warm, nutritious meals. I also supported a plan to create a tax credit for people 62 and older. For students, I fought for record-level funding for our local K-12 schools and am working to ensure resources go directly into classrooms so students have the tools they need to succeed. I helped create better training opportunities that prepare students for highly-skilled careers and 21st Century Jobs. I also pushed for new solutions to improve safety in K-12 schools and personally spearheaded the safety reforms for our state’s public universities. Serving the community I love is an incredible honor and something I could not do without your support and confidence. With your help, I will continue working hard to ensure our area and our state are headed in the right direction. As always, you can contact my office with any state or local issues by calling (517) 373-1403, emailing KimLaSata@House.mi.gov or visiting my website at www.RepLaSata.com.
Results, not rhetoric Results, not rhetoric, that’s what I’ve always been about. I remain focused on the issues that matter to folks here at home, whether it’s health care, jobs and economic growth, protecting our Great Lakes, immigration reform, or any issue before Congress. After years of struggling to get ahead, the American people are seeing jobs, opportunity, and confidence come roaring back.
So far, we have made significant strides. From historic investments in combatting the opioid crisis through the 21st Century Cures Act, improving our economy through pro-growth tax reform, building a stronger military by passing the National Defense Authorization Act, ending human trafficking, and much, much, more. Unemployment is at its lowest point in decades, 90% of Americans are seeing increased take-home pay, shared burdensome and unnecessary red tape, and economic confidence continues to rise.
Clearly, more work remains. The job is never done. Please know that I will continue to work in a common-sense, bipartisan way to tackle the many challenges facing Michigan and our country. To learn more about this and other important legislative issues, please visit my website: upton.house.gov/results or call my offices in Kalamazoo (269-385-0039), St. Joseph / Benton Harbor (269-982-1986), or Washington, D.C. (202-225-3761).