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Don’t Fall For these Retirement Plan Myths

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					Don’t Fall For these Retirement Plan Myths

Retirement plans are not like regular savings or investment accounts. They come
with tax incentives to encourage us to save and invest wisely in anticipation of our
golden years. And, along with these tax incentives comes a fair share of
government regulation. All the rules can lead to misunderstandings and myths
about retirement plans. Here are a few examples:

   1. Your money has to stay in your 401(k) until you retire. In reality, the age at
      which you’re free to withdraw funds from your 401(k), penalty-free, is 59
      ½. However, in general, you can take distributions before this age, but
      you’ll have to pay a penalty. Under some circumstances, you may be able to
      avoid a penalty by taking a hardship withdrawal, for example, to pay certain
      medical or educational bills.
   2. When designating a beneficiary, naming your estate is the way to go. The
      truth is, designating your estate as beneficiary of your 401(k), IRA or other
      retirement account might be the worst possible choice. Taking this route
      can prevent your spouse from rolling over inherited retirement funds into
      his or her account, and it can shorten the amount of time over which your
      loved ones can withdraw funds from your plan. The result? A potentially
      bigger income tax bill for those you leave behind, and an overall reduction
      in the value of their inheritance.
   3. Your Roth IRA can grow, tax-free, forever. One of the benefits of a Roth
      IRA is that, since the contributions you make to the account are in after-tax
      dollars, you’re not required to take withdrawals during your lifetime.
      However, this applies only to you, and not to your beneficiaries. When your
      beneficiaries inherit your Roth IRA, they’ll have to take minimum
      distributions, based on an IRS formula.
   4. After you reach age 701/2, the government dictates how much you’ll
      withdraw from your IRA. This myth is partially true. Once you reach age 70
      ½, you’ll be required to take a minimum amount from your account each
      year. This is called a Required Minimum Distribution(RMD). However, your
      RMD is only a minimum; you’re allowed to take as much as you want, or
      even cash out your entire account, at any time.
  Believe it or not, your retirement accounts can have a huge impact on your
  overall estate plan. You’ll want to talk to your estate planning attorney to
  make sure your retirement plan and your estate plan work effectively
  together.

Experienced estate planning attorneys Worcester MA of the Law Offices of James
A. Miller estate planning and business planning resources to residents of
Worcester MA. To learn more about these free resources, please visit
www.mamedicaid.com today.

				
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Description: Retirement plans are not like regular savings or investment accounts. They come with tax incentives to encourage us to save and invest wisely in anticipation of our golden years