World Class Mergers & Acquisitions  |  For Companies $5 Million to $100 Million in Revenue

Mergers & Acquisitions FAQ – October 2015

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: I own a business that is moderately successful and would like to see it passed on to my wife and children.  How and when is the best time to start the process or begin planning the transfer?

A: The best time to begin the business succession process is right now, if it is your desire to keep your business as a going concern after your leaving, or even if you do not plan for the business to stay as a going concern.  If you do not plan for the succession (or even non-succession of your business), your estate or heirs can and will be subject with the burden of making decisions that may not be the best for the business or your interests.

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