Posted by Denise Kovach, CFP®, AIF® 

One common mistake occurs when an IRA owner fails to name a beneficiary. Unlike other property, IRA’s do not pass by will. They pass according to the IRA’s beneficiary designation form. If there is no named beneficiary, the default beneficiary will generally be the owner’s estate and subject to probate. Plus your beneficiary won’t be able to stretch distributions over their lifetime. Make sure your beneficiary information is accurate… and avoid making distributions to unintended beneficiaries, like your ex-spouse.

Another is failing to take your Required Mandatory Distributions beginning at age 70-1/2 from your IRAs. Failing to do so can lead to a stiff 50% penalty. This includes taking your RMD from any Inherited IRAs you may have. While Roth IRAs are not subject to RMDs during the owner’s lifetime, if they pass away and leave it to a non-spouse beneficiary, that person will be required to take distributions based on their own life expectancy.

There are two types of rollovers: indirect and direct trustee-to-trustee. With an indirect rollover, you actually take receipt of the funds and for the distribution not to become a taxable and possibly penalized event if you are under age 59-1/2, you have 60 days from receipt of funds to roll them back into your IRA. You can only do this once in a rolling 12 month period and this includes all IRA’s combined.

Contributing too much can trigger a penalty – 6% of the excess contribution each year.

Click here for more information on Denise Kovach.

To set up a complimentary visit with Denise Kovach, call 407-869-9800 or complete this form.