Remember that the government only represents about 30 and many of us do not have one. It is up to individuals to invest wisely short and long term in order to make up for the short fall if he or she would like to live comfortably after retirement without giving up some retirement plans. In this article, we will discuss options in case of death of RRIF and IRA account holder with beneficiary other than spouse.



I. RRIF account

A. Dependent named as beneficiary

a) Your RRIF is not included in the value of your estate on your final tax return if you pass it on to a financially dependent child of any age or a grandchild who is under 18 and use the proceed to by term annuity.

b) They will pay tax only on the payments they receive.

C. Others

a) The entire value of your RRIF will be included on your final tax return as income.

b) If the proceed is large, you may have to pay tax at the highest rate.

II. IRA account

1. IRA cccount holder under 70 ? years old

a) Lump sum distribution

All assets in the IRA are distributed to the beneficiary at once and before 12/31 of the year of IRA holder dies. Income taxes will be paid on the distribution all at once.

b) Inherited IRA

i) IRA assets are transfer to the beneficiary name

ii) money in IRA transfer will not be available until the 5th year after the year in which the account holder died.

c) Inherited IRA with life expectancy method

i) IRA assets are transfer to the beneficiary name

ii) Annual distributions of inherited assets are spread over beneficiary life expectancy determined by your age in the calendar year following the year of death and reduced by one each year thereafter.

2. IRA acccount holder over 70 ? years old

a) Lump sum distribution

i) Assets held inside of IRA account are distributed at once.

ii) Income is also pay on the assets distribution and 10% penalty is not applied.

b) Inherited IRA life expectancy method

i) IRA assets are transfer to the beneficiary name.

ii) Beneficiary must take an annual required minimum distribution over his or her life expectancy no later than 12/31 of the year following the IRA account holder's death.

iii) Yearly distributions are spread over beneficiary life expectancy determined by your age in the calendar year following the year of death and reduced by one each year thereafter.

I hope this information will help. If you need more information, you can read the complete series of the above subject at my home page: