World Class Mergers & Acquisitions  |  For Companies $5 Million to $250 Million in Revenue

Mergers & Acquisition FAQ – February 2013

Q: Is it possible to have Roth and traditional IRAs as part of a comprehensive plan?

A: Yes.  Individuals can have an assortment of Roth IRAs, traditional, and even employer retirement plans as their overall retirement plans.  However, when funding the IRAs, it is important to mention the combined limit for both IRA types remains the same at $5500 per year.

Q: Are Roth and traditional IRAs taxed differently in an estate?

A: Yes and no.  In an estate setting all property is considered part of the estate.  As such, all property contained within the estate is subject to estate tax.  Once the estate is taxed, the distributed property is subject to tax on its own character of gain.  A Roth IRA is not subject to income tax as its character holds from one generation to the next.  The traditional IRA’s character remains ordinary income in nature, and in so far as the traditional IRA is income, it is subject to income tax.

Q: For the purpose of retiring, are there some states that are better than others from a tax standpoint?

A: Yes.  Some states are better than others when dealing with taxes that are common to retirees on fixed incomes.  Because every situation is different, retirees are best advised to do their research when choosing a state for tax reasons.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors