This week I speak with Burt White, Chief Investment Officer of LPL Financial. Burt and I discuss LPL’s mid-year outlook titled The Investor’s Almanac.
Burt and his team do a great job simply communicating the economic and investing environment. Their Investor’s Almanac is a great tool to help us invest wisely. No bold predictions or market calls here, just easy to understand insights you can use to make better informed investing decisions. If you’d like a free copy of their Investor’s Almanac you can access it in the Retirement Answer Library.
In this episode we discuss:
- how to use investment outlooks to Invest Wisely
- where the U.S. is in the economic cycle
- where they see potential risks and opportunities
- how international markets are not in sync with U.S. markets
- why you should consider harvesting high quality bonds
- possible alternatives to traditional fixed income
- places to find income
- super themes that should provide a benefit the U.S. economy
- the importance of turning off the worry factory of financial media
Retirement Tip of the Week: Designating a Trust as a Beneficiary of an IRA
Last week a client called requesting the beneficiary of his Individual Retirement Account (IRA) be changed to a trust. This planning strategy has become more popular over the last few years. This strategy for IRAs can has some benefits if the ultimate beneficiary is:
- a minor child
- someone with special needs
- a spouse from a second marriage
- a spendthrift with poor financial skills
The trust can help protect the inherited assets and better control how those funds are used by the beneficiary of the trust.
Be careful using this strategy, though. Done incorrectly, the strategy could conflict with IRS rules and possibly create big tax problems. It is important the attorney drafting the trust be familiar with certain aspects unique to inherited IRAs.
Some things to consider are:
- Make sure the beneficiaries of the trust are people. They cannot be non-persons (like a charity).
- Consider adding language specifically prohibiting distributions to non-persons.
- Make sure it is a Conduit Trust. It should include language that requires the distribution from the trust to the beneficiaries of the Required Minimum Distributions (RMDs) coming from the inherited IRA.
- If there is more than one beneficiary, consider having a separate trust for each. This will also allow each trust beneficiary to use their own age for required minimum distributions.
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