Financial Planning at BMO Investment Services

Depending on your age, you may have flexibility on how much and from which accounts you take withdrawals from. Conventional wisdom is that you start with your taxable accounts, then switch to your tax-deferred retirement accounts, and leave your tax-free accounts for last. Additional strategies exist, but they should always be discussed closely with your tax-preparer and wealth management team to ensure they’re properly executed.

A solid financial plan will help determine the probability of living your life the way you want. It will address critical questions like whether or not you’ll have enough to retire as you’d like, if you’ll be prepared for health care needs that come with aging and how to get the most from social security.

First, you should determine what’s important to you, what it is you’d like to leave behind and explore the implications of transferring assets. There are numerous solutions that could be advantageous from a tax perspective, such as insurance with asset transferring benefits, annual gifting strategies and getting documents like wills and Power of Attorney (POA) and beneficiary designations in order.

If you thought the “stretch” provisions with your IRA would enable your heirs to take Required Minimum Distributions (RMDs) based on their life expectancy and you named a trust as a beneficiary, those rules are no longer in effect.

IRAs must now generally be depleted within a ten-year period by a designated beneficiary. You can apply other measures to provide for your heirs, but don’t make decisions like this on your own. Consult a financial advisor who can assist and guide you through your options.