Thanks to the salutary effects of tax-free growth, the miracle of compound interest, and freshly minted tax breaks aimed at saving spendthrift baby boomers from themselves, a lot of people are going to accumulate more money in IRAs, pensions, profit sharing plans, 401(k)s and similar plans than ever before.

Consider, for example, a 72-year-old married man with three children who has accumulated $2.5 million for retirement. By making the most of multi-generational IRA planning, total distributions from a $2.5 million retirement nest egg could exceed $11 million! Putting together a successful multi-generational IRA takes careful planning, as there are plenty of traps and pitfalls for the inexperienced. As Forbes magazine put it, “The rules covering inherited IRAs are the most complex that ordinary taxpayers ever encounter; even the IRS hasn’t filled in all the gaps.”

Your America’s IRA Center advisor will gladly describe to you in detail how an MGIRA works, provide a detailed diagnostic review of your current accounts, and help you decide whether or not this powerful legacy option is right for you.
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What is a Custodial Agreement?
Hint: It isn’t a contract between a grammar school and a janitor.

The role of a custodian is diverse - the safekeeping of assets such as equities and bonds, the settlement of any purchases and sales of such securities, as well as the distribution of income from such assets.

Why You Should Care
Your custodial agreement sets the rules by which you will accumulate your savings balance, and then later, how it will be distributed to you or your heirs. Few IRA owners ever take the time to fully review the provisions and exceptions in these critical documents. As a result, you may be surprised to learn that most of these agreements will make the federal government the primary beneficiary of your retirement account!

A Solution is Available
Your America’s IRA Center advisor is an expert in custodial documents and can help you create an IRA distribution strategy that protects your nest egg from excessive and needless taxation. A comprehensive review of your custodial agreement is a crucial step in determining if your IRA is an IOU to the IRS.
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Rolling Over Your Retirement Plan
Question: How can taxable money become tax-deferred?
You have some crucial decisions to make about how you take distribution of your hard- earned savings. Not understanding rollover regulations can lead to unintended tax consequences that chip away at retirement savings. Your America’s IRA Centers advisor will explain the negative tax implications of taking a lump sum distribution and the advantages of rolling those funds into an IRA.

A Word of Caution
The custodian of your 401(k) will not automatically perform this service for you. In addition, the tax codes provide for a 60-day window during which you can remove your qualified money from your pension or 401(k) and deposit it in a traditional or Roth IRA. Be advised: The IRS does not trust that you will dutifully meet your 60-day obligation.

From Tax-Infested to Tax-Free
Your America’s IRA Centers advisor can explain how you may bypass the 20 percent withholding requirement by structuring the transaction as a trustee-to-trustee transfer. Your advisor will also explain the legacy advantages of rolling your 401(k) into an IRA, including the ability to stretch the period of tax-deferred earnings within an IRA beyond the lifetime of the person who set up the account at a compounded, tax-deferred rate. Your advisor can help you decide whether or not this powerful option is right for you.
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What is Net Unrealized Appreciation?
Question: Can I avoid taxation on the appreciation of my stock?
Net Unrealized Appreciation (NUA)
Earnings on the appreciation of an asset over time are called capital gains, measured by the sale price of the stock minus the original purchase price of the stock. If your 401(k) plan holds stock from your employer and that stock appreciates, its fair market
value will be considerably higher than its cost basis when you retire.

Our expert advisors can explain other stipulations in the code involving NUA:
• To qualify for the break, you must take the entire pension plan account balance
in a lump sum distribution over the course of one tax year.
• Dividends paid to the stock are not tax-deferred.
• For inherited stock in an IRA, beneficiaries are taxed at a different cost basis, called up a step-up in basis. Your advisor can describe for you how this plan works, and it may affect you and your heirs.
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Retirement Investing
Question: What is the “distribution of phase” of retirement planning?
As we grow older, we leave a period of relative complacency about money and transition into a more critical period of anxiety and fear, what we at America’s IRA Centers call the distribution phase. It is at this point that we are faced with important choices that could help defer or mitigate taxes, choices that will ultimately dictate the kind of lifestyle we can enjoy when we leave the workforce. Successful tax planning means understanding the challenges, opportunities, and risks associated with this critical time.

2006 research study by Prudential Insurance confirmed that investors knew that this was a different time for them, and 72 percent recognized that its financial risks were unlike any that they have previously faced. The Prudential survey revealed some ambivalence about risk, with about half of the respondents favoring a conservative strategy, while half opting to seek capital gains by investing more aggressively. Two main fears were revealed:

Volatility
An aversion to investments that threatened principle and exposed them to risk.
Running Out of Money
Fear of outliving assets and consequently choosing an aggressive investment strategy.

The good news is that despite the increased anxiety, choices for investors approaching retirement are greater than ever. Investors can protect principle, lock in gains and generate a stream of income that they can’t outlive. Your America’s IRA Centers advisor will work with you to determine the right options for you and your family.
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What is a Required Minimum Distribution?
Question: And what happens if I don’t take mine on time?
Congress created IRAs to help promote saving, but it never intended for Americans to defer taxes forever. That is why the tax code requires that when IRA account owners reach the age of 70.5, they must begin drawing down their accounts and paying tax on the distributions.
Those withdrawals are called Required Minimum Distributions (RMDs).

Failure to take RMDs on time (called a Required Beginning Date) can trigger stiff penalties including an additional tax penalty of 50 percent on distributions you were supposed to take but didn’t. Your America’s IRA Centers advisor will gladly describe for you how the calculation for RMD is done.

Your America’s IRA Centers advisor will assist you with this calculation, identify your Required Beginning Date, and help ensure that you do not fail to take your scheduled RMDs. Ask America’s IRA Centers to help you determine how to calculate the amount of your required minimum distribution.
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What is a Trustee-to-Trustee Transfer?
Question: What common mistake do HR departments make regarding distribution?
“Trustee” is a legal term that, for the purposes of investing, identifies an institution or financial services entity that holds other people’s money. Account holders who seek to move money from one institution to another can elect to do so without taking physical possession of their money. They simply direct the transfer of their money to a different retirement account. That process is called a trustee-to-trustee transfer.

Your America’s IRA Centers advisor advocates using trustee-to-trustee transfers to ensure that your time frame window is met on rollovers. Missing the 60-day window can disqualify the funds, sabotage the rollover, subject your entire retirement savings to immediate, needless and heavy taxation, and may destroy the opportunity of “stretching” your distribution over your life and the lives of your heirs. Your America’s IRA Centers advisor will gladly explain to you how such transfers can help avoid tax penalties and defer tax liability.
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What is a Beneficiary Review?
The beneficiary of an IRA account is the person to whom the original account holder wants the account to pass to at their death. As your America’s IRA Center™ advisor can explain, there are profound tax implications involved in naming beneficiaries. Your advisor can demonstrate how selecting both primary and contingent beneficiaries for your IRA can grant you the flexibility to leave a tax-deferred financial legacy to heirs.

Many account custodians (banks, brokerage houses) lose data when they move, downsize, or change operating systems. The longer you have held your account with a major financial institution, the greater the likelihood is that the custodian can no longer identify your beneficiaries, or even locate the original forms.

For these reasons, America’s IRA Centers™ recommends an annual beneficiary review of all Roth and IRA accounts. Remember: No beneficiary can be named or changed after the death of the original account owner.
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The Advantages of an IRA
Question: How does an IRA give you a wider array of  investment choices?
Since their advent in 1977, IRAs have gained widespread public acceptance—more than 60 million Americans own either Roth or traditional IRAs, with more than $12 trillion dollars invested. Most economists, financial planners, and accountants regard the IRA program as a great savings windfall for the American people. Employee savings and retirement plans present an attractive option for many Americans. Many qualified plans offer the convenience of payroll deduction, plus matching contributions from an employer. However, a comprehensive retirement plan should consider all available options, and your America’s IRA Centers™ advisor can help you determine which options are right for you.

IRAs—particularly Roth IRAs—are both accumulation and distribution vehicles. If the distribution phase is properly administrated, an IRA can become a multi- generational legacy, “stretching” the assets and the required distributions beyond the life of the original owner, continuing to grow tax-deferred over multiple generations. This is what is termed a legacy investment strategy, and it is accomplished through a Multi-Generational IRA (MGIRA). A MGIRA is not an account that you open, nor is it something that you select from a menu of financial services. MGIRA is an IRA distribution strategy. Your America’s IRA Centers™ advisor can describe for you in greater detail how a MGIRA works, and help you decide whether or not this powerful legacy option is right for you.

Potential IRA Advantages
•More estate planning options
•Greater opportunity for a multi-generational “stretch”
•Wider array of investment choices within the account
•Simplified conversion to a Roth
•Plan portability
•Account consolidation options
•Professional advice from America’s IRA Centers™
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To Roth or Not Roth
Question: How do Roth IRAs differ from Conventional IRAs?
When the Roth IRA was introduced in 1998, investors were presented with a second, equally tantalizing option for their retirement planning needs. Your America’s IRA Centers™ advisor can explain the differences between the two types, and help you decide which option is most appropriate for you. Roth and traditional IRAs have the same objective: both provide an incentive to save, and both provide income after retirement. The primary difference is that the funds in a traditional IRA grow tax-infested, while the funds in a Roth IRA grow tax-free. Contributions you make to a traditional IRA are taxed upon withdrawal (generally, after age 59.5).

Roth vs. Traditional IRA: Features and Distinctions
Traditional IRA account holders must take Required Minimum Distributions (RMD) each year, beginning at age 70.5. Roth accounts are not subject to RMDs. Your America’s IRA Centers™ advisor can explain the differences between the two options and assist you in making a decision.
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