Planning for Life

Special Needs Trusts and Retirement Benefits: A Complicated Subject

Posted by Anthony Bushu on May 5, 2017

By Karen Mariscal 

older parent and child.jpgMuch of your savings may be in your 401(k)’s and IRAs.  It is important to designate the proper beneficiaries for these accounts, so that your beneficiaries do not have to pay taxes on the funds prematurely. Unfortunately when a beneficiary has special needs, it gets complicated.

If the beneficiary receives the IRAs and 401(k)’s directly, the required minimum distributions (RMDs) could prevent your child from receiving the government benefits he needs. But if you designate a special needs trust as the beneficiary of a retirement account, there could be adverse income tax consequences. 

Fortunately, with proper drafting, such tax results usually can be prevented. People have written entire books on this subject -- this is our attempt to summarize the basic issues.           

Read More

Topics: Retirement Planning, Special Needs Trust, Retirement Benefits, Required Minimum Distributions

Subscribe to New Blog Posts

Recent Posts

Most Popular Posts

Posts by Topic

see all