Using classic estate plans on your IRA, retirement advice from Steve Sexton

Steve Sexton, President of Sexton Advisory Group and host of his very own radio show, “Winning in Life,” is regularly featured on the San Diego Entertainer’s E&L TV show for his “Money Minute” segments. On this episode, he continues to share the five part series he started called the “5 most costly mistakes retirees make” and finally introduces the last mistake retirees make.

Mistake #5: Using classic estate plans when you have an IRA or a 401k.

Most people understand what a classic estate plan is: the surviving spouse gets everything, and after both parents pass, the children divide everything equally. According to Steve, this beneficiary plan works out well with most assets, but retirement planning is different. How you handle your retirement plan could potentially create or eliminate thousands of dollars in taxation.

Everyone can agree that they wouldn’t want any amount of their IRA to go to the IRS. If you have beneficiaries, you want them to receive as much of your IRA as possible without worrying about how much taxes they will have to pay on it. This is why Steve does not recommend classic estate planning when it comes to retirement plans. Steve explains that there is a Protective Retirement Trust (PRT) that could protect you and your family from thousands of dollars in taxes.

The Protective Retirement Plan (PRT) is able to transfer your retirement plan to your family free of taxation. It has 100% protection against creditors and probate. It also has long term care benefits and the ability to plan across multiple generations. But how does this work?

Steve explains that the PRT is set up by an estate planning attorney. Once you set it up, it is funded by transferring 2-5% of your retirement plan to the trust every year. You do, however, pay a small amount of taxes as you transfer the money each year but when once the money is transferred, it is tax free forever. The key to this approach is that you “pay pennies now and save dollars later.”

Are your current advisors talking to you about these options? If you are interested in learning more about a PRT, contact Sexton Advisory Group at 800-560-2611. For other financial advice from Steve, tune into his radio show, Winning In Life Radio at 9:00 AM every Sunday on KBCQ 1170 AM