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Individual Retirement Accounts (“IRAs”) are a very popular investment vehicle for retirement, but IRAs also need to be taken into account when contemplating one’s estate plan. Although IRAs can be used to provide for one’s intended heirs either directly or through a trust, proper planning is still required to ensure that the beneficiaries truly benefit from the IRA and avoid unnecessary taxes.

An IRA is a personal savings plan that allows an individual to set aside money for retirement and simultaneously create tax savings. The advantage of an IRA is that often an individual can deduct from his/her taxes all or a portion of the contribution made to the IRA and may also be eligible for a tax credit equal to a percentage of the contribution. Further, earnings in a traditional IRA are generally not taxed until the earnings are distributed to the IRA holder. This typically does not start until the IRA holder reaches the age of 70 ½ when distributions of income become mandatory.

via Queens Newspaper New York – Queens NY News Paper- The Queens Courier > Archives > Queensbusiness Main > Top Stories > Elder Law Minute: IRAs – A Valuable Tool in Estate Planning.