Retirement Account Planning

Older woman looking over retirement account documents

As you look ahead to your golden years, retirement account planning becomes a top priority. At Surprenant & Beneski, P.C., we understand the importance of making informed decisions about your retirement accounts to secure a comfortable and financially stable future. Our team of experienced estate planning attorneys serving Southeastern Massachusetts and Cape Cod is here to guide you through the process.

Why Retirement Account Planning Matters

Retirement account planning is a critical component of your overall estate plan. It allows you to:

  • Save for Your Future – By contributing to retirement accounts, you can accumulate wealth over time to support your desired lifestyle in retirement.
  • Minimize Taxes – Proper planning helps you take advantage of tax-deferred or tax-free growth within certain retirement accounts, reducing your tax liability.
  • Protect Your Assets – Retirement accounts often have built-in protections against creditors and legal claims, safeguarding your hard-earned savings.
  • Provide for Your Loved Ones – With careful beneficiary designations, your retirement assets are passed to your chosen beneficiaries efficiently and according to your wishes.

Types of Retirement Accounts

There are several types of retirement accounts, each with its own features and benefits:

  • Traditional IRA – You can deduct contributions to a Traditional IRA from your taxes, and the account grows tax-deferred until you withdraw funds in retirement.
  • Roth IRA – You contribute after-tax dollars to a Roth IRA, but qualified withdrawals in retirement are tax-free.
  • 401(k) – Employers often provide 401(k) plans, enabling you to contribute pre-tax dollars and potentially receive matching contributions from your employer.
  • 403(b) – Non-profit organizations and public schools offer 403(b) plans, similar to 401(k) plans.
  • SEP IRA – Self-employed individuals or small business owners can utilize Simplified Employee Pension (SEP) IRAs.

At Surprenant & Beneski, P.C., our knowledgeable attorneys can help you understand the pros and cons of each type of retirement account and determine which ones best fit your needs.

Maximizing Your Retirement Savings

To make the most of your retirement accounts, consider the following strategies:

  • Start Early – The earlier you begin saving for retirement, the more time your money has to grow through the power of compound interest.
  • Contribute Regularly – Make consistent contributions to your retirement accounts, aiming to save at least 10 to 15% of your income each year.
  • Take Advantage of Employer Matching – If your employer offers a 401(k) match, contribute enough to receive the full match, which is essentially free money.
  • Increase Contributions Over Time – As your income grows, consider increasing your retirement account contributions to boost your savings further.
  • Diversify Your Investments – Spread your retirement savings across different asset classes and investment vehicles to manage risk and potentially maximize returns.

The experienced attorneys at Surprenant & Beneski, P.C., can work with you and your financial advisors to develop a customized retirement savings plan that aligns with your goals and risk tolerance.

Understanding Retirement Account Distributions and Beneficiary Designations

When it comes to accessing your retirement funds and passing them on to your loved ones, careful planning is essential:

  • Required Minimum Distributions (RMDs) – All employer-sponsored retirement accounts have RMDs, which are minimum amounts you must withdraw each year once you reach a certain age (now 73). Failure to take RMDs can result in significant tax penalties. It is essential to understand how to calculate RMDs and how they can impact your overall retirement income strategy.
  • Early Withdrawals – If you need to access retirement funds held in a 401(k) before reaching the age of 59.5, you may face early withdrawal penalties and ordinary income taxes. However, these penalties have some exceptions, such as the “Rule of 55” for 401(k) plans and certain hardship withdrawals.
  • Beneficiary Designations – Naming beneficiaries for your retirement accounts ensures that the assets pass directly to your intended recipients upon your death, bypassing the probate process. Reviewing and updating your beneficiary designations is crucial, especially after major life events like marriage, divorce, or the birth of a child. You may also want to consider naming contingent beneficiaries in case your primary beneficiaries predecease you.
  • Spousal Beneficiaries – When spouses inherit a retirement account, they have unique options. They can choose to treat the account as their own, roll it over into an IRA in their name, or remain as a beneficiary. Each option has its own advantages and potential drawbacks, depending on factors such as the spouse’s age and financial needs.
  • Inherited Retirement Accounts – When a non-spouse beneficiary inherits a retirement account, they must follow specific rules for distributions based on their relationship to the original account owner and the type of account. In most cases, non-spouse beneficiaries must empty the account within 10 years of the original owner’s death, following the SECURE Act of 2019. However, there are exceptions for certain eligible designated beneficiaries, such as minor children, disabled individuals, and chronically ill individuals.

The estate planning attorneys at Surprenant & Beneski, P.C., have a deep understanding of the rules surrounding retirement account distributions and beneficiary designations. We stay up-to-date with the latest changes in the law to ensure that our clients receive the most accurate and relevant advice. We can help you create a comprehensive plan that maximizes the benefits of your retirement accounts, minimizes potential tax liabilities, and ensures a smooth transition of assets to your beneficiaries.

By working closely with you and your financial advisors, we aim to develop a customized strategy that meets your unique needs and goals, providing you with peace of mind and financial security in your retirement.

The Importance of Working with a Qualified Estate Planning Attorney

Retirement account planning is just one piece of the puzzle when creating a comprehensive estate plan. By collaborating with qualified estate planning attorneys, you can effectively integrate your retirement accounts with your other estate planning tools, such as wills, trusts, and powers of attorney.

Contact a Massachusetts Estate Planning Attorney Today

At Surprenant & Beneski, P.C., we pride ourselves on providing personalized, practical advice tailored to your unique needs and goals. Whether you’re just starting to save for retirement or are already enjoying your golden years, our team is here to help you make the most of your retirement accounts and secure your financial future.

To learn more about retirement account planning and how we can assist you, don’t hesitate to contact Surprenant & Beneski, P.C., at one of our convenient office locations. Our dedicated attorneys and support staff look forward to working with you to create a retirement plan that gives you peace of mind and helps you achieve your dreams.