Beneficiary Forms Part 02

How Your Beneficiary Form Could Be Worth Millions..!!

Learn how to set up your beneficiary forms to potentially leave behind millions to the ones you love.


Hi Patrick McNally here with retirement lifestyles advisors where it’s all about having the health wealth and freedom to live your dream retirement. And today’s Quick Tip is all about how your beneficiary form could be worth millions of dollars.

OK, so this week’s tip is a continuation of last week which was talking about the importance of continually reviewing and updating your beneficiary forms. Specifically on retirement accounts. If you didn’t get a chance to see that video visit click on the media tab and then click video quick tips, it’s the first one on there.

So this week I want to give you a second example of the importance of listing beneficiaries properly on your retirement accounts. This example is what I like to call legacy planning. A lot of people who come in to see me either want to leave behind a specific amount of inheritance, or they at least agree that they won’t be able to spend it all and that there’s gonna be something left behind and they would rather it stay in the family instead of it being lost to uncle sam and a bunch of taxes. Most people want to leave it to their kids or their grandkids or a little of both.

There’s a number of ways to leave money behind to the people that we love but unfortunately most people, unbeknownst to them, plan to do it in such a way that benefits the IRS way more than it benefits their families. And it simply comes down to a lack of education on the different options that are available to people when they inherit money.

So let me give you an example. If you’re a grandparent who may want to carve off some of their retirement account and leave it to your grandkids. Imagine if you could set up a scenario where your grandson or granddaughter or both could receive an inheritance check from you for the rest of their lives. This kind of planning is what I’d like to call the stretch IRA.

Now if you’re already in retirement I’m sure you’ve probably heard of RMD’s or required minimum distribution’s. If you’ve never heard of that, it’s when the IRS makes you take withdrawals from your IRA. Even if you don’t need the money. So, beginning at seventy and a half the IRS uses your life expectancy to come up with a factor that tells you how much money you must withdraw from your IRA each year. And that’s known as your required minimum distribution.

Well, when you pass away one of these days, and leave your retirement account to someone else, they still have to take an RMD, even if they’re not seventy and a half years old.

 However, the RMD is now based on your beneficiaries age when they inherit the money, not yours. So if you leave money to a grandson lets say, he has a longer life expectancy than you do, according to the IRS. And since he has a longer life expectancy he is required to take out much less from your account then you did.

So here is the real power of the stretch IRA. Since your grandson in this example only has to remove a tiny portion from the account what does that allow the account to do? It continues to grow.

And it will grow to a potentially very large amount. Let me give you a fun example. If you left $100,000 to a one-year-old, and only the minimum required by the IRS was withdrawn each year, and that money hypothetically continued to grow at an average of eight percent per year, that one year-old would be paid over eight million dollars over their lifetime. eight million bucks..!

Isn’t that amazing. It’s an extremely powerful way to leave behind a lasting legacy. It’s always fun for me to share this kind of planning with clients who feel like they may not be able to leave behind some kind of big inheritance because of the size of the current IRA account. It doesn’t matter the size that you leave behind, what matters is how the beneficiaries remove the inheritance. And unfortunately most beneficiaries don’t even know this kind of planning exists as an option. Nine out of ten beneficiaries take all of the money out at once, where as much as fifty percent or more it’s taken by the government in taxes and your heirs get to keep what’s left over. That’s the governments plan but it doesn’t have to be yours.

If you’d like to learn more about the stretch IRA I’d like to invite you to schedule a free phone call with me and I’d be happy to answer any questions that you have.

Look, the call is free, but the information you learn could be priceless, so visit where you’ll find my personal calendar. Simply find a day and a time that works and reserve the call, do it today.

If you’re not subscribed to my youtube channel Retirement Lifestyles Tv, go ahead and click on the little subscribe button right there…

You can follow me on Instagram at retirement lifestyles advisors. And on twitter my handle is @thepmcnally.

You can also check us out on facebook, at retirement lifestyles advisory group, be sure to follow and like our page.

If you’re lucky enough to live in the north state, tune in to my radio show Retirement Lifestyles every Saturday morning at 9am on news talk 1057 KQMS.

And finally, you can catch my TV show Retirement Lifestyles on KIXE Ch 9, check your local listings for dates and times.

Thanks for watching today’s quick tip, do me a big favor and click that like button, feel free to share it and post any comments or questions that you have.

And I wish you the best in retirement!

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