Three Quick Ones and a Cold Fact
I usually stick to one topic in my Up Early emails, but today I’m going to try a quick hit on three topics I’ve run across lately.
Inherited IRAs: IRAs you create yourself have one set of distribution rules. IRAs you inherit as a beneficiary have a completely different set of rules that you need to know. Most people who inherited an IRA in 2020 or later have to withdraw the full IRA balance (and pay taxes) within 10 years of the death of the original owner. You can’t wait until you are in your 70s to start to withdraw, and depending on the age of the original owner at death, you might also have Required Minimum Distributions every year up until full withdrawal in year 10. There are some very complicated exceptions to the rule above so check with your estate planning attorney, financial planner, accountant and/or the financial institution holding the inherited IRA. The RMD deadline for 2025 is fast approaching.
Gift Card Planning: According to research by Bankrate, the average American has $244 of unused gift card balances. There are also lots of folks who lost money because of expiration, a lost card or the retailer going out of business. The best defense is organization: Register your card per the instructions on the card. Take a photo of the card (front and back) and see if you can transfer the card to your virtual wallet on your phone for ease of use. While you have your phone out, set a reminder close to the expiration date so you don’t lose out. Some states have a mandatory cash back requirement once the gift card balance gets low. Michigan does not, but Michigan does have a rule banning inactivity fees and requiring a minimum 5-year expiration period.
Free Money Awaits Infants: Watch for the details of “Trump Accounts” to come out in 2026. Any child born in 2025 through 2028 is potentially eligible to receive $1,000 in seed money from the Federal Government for the account which will then grow tax-deferred until the child reaches age 18. The details of the accounts are complex, and they don’t suit everyone’s needs, but I’d much rather see some of my taxes go to funding an account for your child or grandchild then I would for some of the “projects” the government takes on.
Those are three quick topics worth considering. Be safe out there in this weather (my trip to Florida over Thanksgiving seems like a long time ago).
Fun Fact: Yes, it’s been cold. But if it will make you feel any better, the coldest day on record in Michigan was February 9, 1934, when the temperature in Vanderbilt (just north of Gaylord) dropped to -51 degrees Fahrenheit.
