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News & Insights > Basic Estate Planning

Basic Estate Planning:

Retirement Plan Assets, IRAs, and other Beneficiary Designated Assets


For many of us, we would rather visit the

dentist than undertake estate planning.

Neither alternative seems to offer much fun.

However, just like your dental health,

keeping your estate plan updated is an

important aspect of life that you want to

stay on top of.

Lay the foundation for your estate plan: start with the basics.

If you are now at the starting line, think about taking some very simple steps each year as preventive maintenance. Make a list of every asset that you own and how it is titled (sole title, joint title, etc). This list should also include a recap of your estate planning documents, such as Last Will and Testament, Trust Agreements and Advanced Medical Directives. Prepare a brief set of instructions for assets that might require special attention upon your death or disability, such as a coin collection. Another basic issue to address is the matter of login and password information. Share your information with those close to you or share the location of your asset inventory and other notes.

The message here is to take some very basic estate planning steps that would create a roadmap to managing your assets and your key information. By focusing on these basics, one can make life a bit less stressful for those that we leave behind. There is no question that for many people this exercise may lead to more complicated and detailed steps, including a consultation with an estate planning attorney.  Picture yourself waiting for the starter to fire his gun as if you were preparing for a race. Basic estate planning is analogous to taking the first steps of a marathon: move into action. The goal is to make some progress that will be helpful to your loved ones but be sure to pace yourself by initially focusing on the most basic aspects of the estate planning process. Make that list!

Update and monitor all beneficiary designations.

Consider where appropriate whether your beneficiary designations are current for assets that should include a beneficiary designation. Common examples of assets which will have beneficiary designations include IRAs of all kinds (SEP, SIMPLE, Roth, Traditional), annuity contracts, life insurance policies and employer plans.

We continue to see cases where a decedent did not file a beneficiary designation with the plan administrator or the plan custodian. In those cases, quite often the estate becomes the beneficiary of the retirement plan asset. This is not a great result for income tax purposes. More importantly though, on a more basic level, one is left to wonder whether the account holder had a specific beneficiary in mind. Had the decedent filed a beneficiary designation, who would that have been?

As you approach age 72, be ready for required minimum distributions.

The Internal Revenue Code requires that IRA owners commence distributions at age 72. Though the first distribution isn’t required until April 1st of the year following attainment of age 72, some thought should be given to taking that first required distribution in the year in which you turn age 72. The deciding factor could be the marginal tax rate for each year. The marginal tax rate is the rate at which the next dollar of income is taxed. For example, one’s average tax rate for 2021 might be 23% federally. The marginal tax rate, however, might be 32% since the taxpayer may have taxable income that places one in that 32% bracket.


Other factors to consider in the decision to take that first distribution in year 2021 or 2022 may include but aren’t limited to (a) the taxation of social security benefits, (b) how adjusted gross income impacts Medicare premiums, and (c) whether other sources of taxable income such as wages may vary in each year.

Also helpful to note is the following:

  1. Employer plan assets also typically require distributions at age 72, but there is an exception for employees that are still employed. This exception only applies to employer plan assets of the current employer.

  2. For individuals approaching retirement or separation from employer: review the assets held within your retirement plan. Do you hold employer securities? If yes, you should carefully review your distribution plan because you may benefit from taking a distribution of the employer securities rather than simply rolling over the plan assets.

  3. Assets held in Roth IRAs are not subject to required minimum distribution rules during lifetime of the Roth IRA account holder.

  4. Assets held in Roth 401k (employer plan) are subject to required minimum distribution rules during the lifetime of the Roth 401k account holder. There is some confusion here since Roth IRA assets are treated differently than employer account. In many instances, the preferred strategy may be to roll over the Roth 401k to a Roth IRA.

  5. When satisfying required minimum distributions for IRAs, it is acceptable to aggregate all your IRAs to calculate one required minimum distribution. Then you can take the entire distribution from one IRA account.

  6. When satisfying required minimum distributions for employer plan assets, it is not acceptable to aggregate all your employer plan assets to calculate one required minimum distribution. You must take a separate distribution from each employer plan account. Life may be less complicated if you roll the employer plans over to your IRA, but other factors will need to be considered, including your comfort level with available investment options.


Every estate plan needs that first step to get rolling by simply making a list of your assets and then building from that foundation. In addition, keep a close eye on employer retirement plan assets, IRAs and other assets that typically require beneficiary designations.

Image by Andrik Langfield
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