Planning for Required Minimum Distributions
One common misconception that both customers and planners typically have is that the taxation
of IRAs or qualified retirement plans (“QRPs”) is not a concern, because those are tax-deferred accounts.
While tax deferral is absolutely an important benefit of qualified plans, the account owner and their
beneficiaries still need to concern themselves with both income and estate taxes.
QRP and IRA benefits are subject to income tax when the account owner and/or their beneficiaries receive
distributions, and the full value of the account is includible in the owner’s estate for purposes of
calculating Federal estate tax liability. In fact, without appropriate planning, it is possible for a
client's retirement account to be depleted by as much as 50 - 70% by this “double tax” regime. With a
thorough understanding of these retirement vehicles and the manner in which they are taxed, along with
appropriate forethought and planning, one may be able to diminish, and even eliminate these losses due to taxes.
This Web site is intended for general information purposes only. It does not nor is it intended to constitute legal, tax or investment advice. Alliance America is not a lawyer, registered investment advisor or investment advisor representative, and is not engaged in the practice of law or the business of investment advice.