does this work for defined benefit plans or only IRAs
I just saw Ed’s PBS show, and he mentioned the one thing everyone must do was file an IRS beneficiary form to protect assets for beneficiaries.
Can I move a defined benefit plan into an IRA?
Do I HAVE to do that to be able to file a beneficiary form & reap the benefits of this strategy?
How does that strategy save ME /make me have more money while I am still alive? this part was not clear,
Thanks
Permalink Submitted by Alan Spross on Sun, 2008-09-21 23:31
You can move a defined benefit plan to an IRA after you separate from service IF the plan offers a lump sum distribution. Most plans do offer a lump sum option at this time.
The beneficiary form Ed refers to is an IRA beneficiary form, not an IRS form. It is filed with your IRA custodian and determines where the funds go at your death. A beneficiary that is named can stretch your IRA over their remaining life expectancy, thereby maintaining tax deferral benefits for a longer period of time. If you did not name a beneficiary, your estate might become the default beneficiary and the IRA distributed according to your will, but at a much faster pace, and within 5 years if you pass prior to age 70. There is no charge to name a beneficiary or to change the beneficiary as often as you wish.
The above benefits your beneficiary but does not affect you while alive. The only exception is that you can take out your RMDs at a slower pace if your spouse is your sole beneficiary and more than 10 years younger than yourself.