Proverbs 13:12 says “Hope deferred makes the heart sick, but a longing fulfilled is a tree of life.” With IRA’s, or individual retirement accounts, hope, or money, deferred allows your longings to be fulfilled when you retire. These hopes include a comfortable retirement, with travel and fun, and providing for your family. Robby talks about how his dad wanted to go to Hawaii with his wife, but after she passed, he instead got to go with his children. This was his hope deferred.
One thing most people where not hoping for is paying taxes on the money in their IRA, but someone is going to be paying these taxes. That is why RMDs, or Required Minimum Distributions, now exist, so that people do not just hold this money in their account until they pass. If your children or spouse inherit this money, it is likely they are going to take the money in a lump sum, and pay a much larger tax bill than if this money was taken out over time. There are some strategies you can put into place now to make the tax bill much more manageable.
The first is QCDs, or Qualified Charitable Distributions, which we talk about a lot on this show. If your hope for this money was to give back to the kingdom, and you are over 70 ½, you can start implementing this today to not only give money to the church, but also satisfy your RMDs and reduce your taxes!
Another strategy involves life insurance. Hans discusses policies that, over the years, will drain your IRA to pay the premium on a life insurance policy. You pay taxes on the amount coming out, and the rest goes to pay the life insurance bill. Ultimately, when you pass, your family is going to receive more money than they would have if you just left the IRA, as life insurance benefits are tax free. In this situation, you still have control over the money, as the cash value of the policy is still available to you. There are even policies that will allow you to access the death benefit early to pay for long term care costs!
It is so important when you are doing this planning that you find someone who is looking out for things that you are not even thinking about and makes sure your family is taken care of.
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You can contact Hans and Cardinal by emailing email@example.com or calling 919-535-8261. Learn more at CardinalGuide.com.