Hall said, "Social Security has a cost-of-living adjustment [that] keeps up with inflation. Our investments will also adjust over time if we keep some growth in the mix. The real lever is spending. When prices bite, pull back on nonessentials. Maybe fewer big trips for a season. Maybe different choices than what you have always done. Keep core bills matched to steady income and let the portfolio work."We don’t marry a 3% or 4% rule [for the percentage of your retirement funds to withdraw each year ]. We set ...

Core Insights - The article discusses the complexities and financial implications of managing an inherited IRA, emphasizing the importance of understanding tax rules and seeking professional advice to avoid costly mistakes. Group 1: IRA Vocabulary and Basics - Understanding IRA terminology is crucial for beneficiaries to navigate the complexities of inherited IRAs effectively [1][4] - Key terms include Required Minimum Distributions (RMDs), Required Beginning Date (RBD), and the 10-year rule, which dictate withdrawal requirements and tax implications [4][10] Group 2: Professional Guidance - Consulting with an experienced financial advisor is recommended to help beneficiaries understand their options and develop a suitable strategy for managing inherited IRAs [2][3] Group 3: Beneficiary Types and Options - The IRS categorizes beneficiaries into three types: spousal beneficiaries, eligible designated beneficiaries, and designated beneficiaries, each with distinct options for managing inherited accounts [5][6] - Spousal beneficiaries can either transfer the IRA into their name or keep it as an inherited IRA, while eligible designated beneficiaries have specific options based on their relationship to the deceased [6][7][8] - Designated beneficiaries, such as adult children, must adhere to the 10-year rule for withdrawals [9] Group 4: Tax Implications and Growth - Withdrawals from traditional inherited IRAs are taxable, which can lead to higher tax brackets and increased Medicare premiums if not managed properly [5][10] - The article highlights the potential for tax-deferred growth on inherited IRA funds, illustrating the financial benefits of delaying withdrawals [10][12][13] Group 5: Naming Beneficiaries - It is advisable for beneficiaries to name their own beneficiaries for inherited IRAs to ensure a smooth transition of the account upon their passing [12][14]

Core Points - An Individual Retirement Account (IRA) is a tax-advantaged investment account for retirement savings, independent of employer ties, making it suitable for self-employed individuals and those looking to supplement workplace retirement accounts [1][2] Types of IRAs - The main types of IRAs are traditional IRAs and Roth IRAs, each with distinct tax implications and contribution rules [3][4][5] - Other types include Rollover IRAs, SEP IRAs, SIMPLE IRAs, Custodial IRAs, Spousal IRAs, and Inherited IRAs, each serving specific needs and circumstances [6][7] IRA Rules - Contributions to IRAs require taxable compensation, defined as income from work, and eligibility varies based on income levels and participation in workplace retirement plans [9][10] - Roth IRAs have specific income limits for contributions, with thresholds set for 2025 and 2026, affecting eligibility based on modified adjusted gross income (MAGI) [11][12] - Annual contribution limits are set by the IRS, with amounts adjusted for inflation; for 2025, the limit is $7,000, increasing to $7,500 in 2026 [13][14] Withdrawal Rules - Traditional IRAs incur taxes on withdrawals, with a 10% penalty for early distributions before age 59 ½, though exceptions exist [15][16] - Roth IRAs allow tax-free withdrawals of contributions at any time, with earnings accessible tax-free after age 59 ½ and a five-year holding period [16][17] - Required Minimum Distributions (RMDs) for traditional IRAs begin at age 73, increasing to 75 in 2033, while Roth IRAs do not require RMDs during the account holder's lifetime [17] IRA vs 401(k) - IRAs and 401(k)s are both tax-advantaged retirement accounts, but IRAs are opened independently, while 401(k)s are employer-sponsored; individuals can contribute to both [18] Choosing an IRA - Factors to consider when choosing an IRA provider include fees, investment options, advisor access, and user experience [24][25] - Steps to open an IRA include deciding on the type, selecting a provider, opening the account, funding it, and choosing investments [26] Rollover IRAs - Rolling over a 401(k) or 403(b) into an IRA can provide lower fees and more investment options, simplifying account management [27] - Specific rules must be followed to avoid penalties during rollovers, including matching the tax structure of the original account and completing the rollover within 60 days [28][29]