Welcome to the Good Steward Law and Wealth Podcast, hosted by Ledly Jennings. In this episode, we continue our series on retirement accounts and your estate plan, focusing on the critical role of Roth IRAs, Traditional IRAs, and estate planning in securing your financial future. Ledly breaks down retirement savings strategies and the tax advantages of different account types, from tax-free growth opportunities to the impact of required minimum distributions. Through real-life examples, we explore how a young investor benefits from a Roth IRA, what an individual in their 60s should consider for wealth transfer, and how those in their 70s can integrate trusts for legacy planning. We also discuss the importance of beneficiary designations, the tax implications for spousal inheritance versus non-spouse beneficiaries, and the risks of failing to name a beneficiary. Whether navigating investment strategies, planning for financial security, or ensuring asset protection, this episode provides essential insights to help you make informed retirement planning and estate decisions.

IN THIS EPISODE:

• [0:30] Ledly recaps inheritance rules
• [1:41] Why a young person may choose the Roth IRA
• [3:51] Which IRA’s are the best options for an individual in their 60’s and why
• [8:56] Example of individuals in their 70’s and leaving their estate to a trust
• [12:22] You must name a beneficiary and the problems incurred if you don’t

KEY TAKEAWAYS: 

• Inheriting an IRA (except for a spouse) can lead to significant tax burdens due to the 10-year withdrawal requirement under the SECURE Act. A Roth IRA, however, is income tax-free and can be left to a trust without the high trust tax rate, making it the best option for inheritance planning.
• For young families, the primary beneficiary is typically the spouse, while a trust is the secondary beneficiary to protect young children. Leaving an IRA to a spouse is usually the best option for older individuals due to the lifetime stretch benefit. Still, trusts are useful for special cases like children with financial difficulties, disabilities, or divorce risks.
• If you have the cash to pay the taxes upfront and a long enough time horizon (typically under age 70), converting a traditional IRA to a Roth IRA can maximize the inheritance value. Paying taxes now ensures beneficiaries receive tax-free funds and avoids pushing them into higher tax brackets upon inheritance.

RESOURCES:

L. Jennings Law - Website

L. Jennings Law - Facebook

Ledly Jennings - LinkedIn

L. Jennings - Instagram

L. Jennings Law - YouTube

ABOUT THE HOST: 

Attorney Ledly Jennings, founder of L. Jennings Law, specializes in protecting legacies and ensuring smooth transitions of personal and business assets. With offices in Arkansas, his firm offers expertise in estate planning, elder law, probate, and business planning. With a J.D. and MBA, plus valuable experience at Stephens, Inc., the state's largest investment bank, Ledly serves high-net-worth clients and family businesses statewide.