Common IRA Mistakes

Many people are not maximizing the benefits of an IRA. Here are common mistakes that lead to an underutilized IRA:

1. Not contributing the max amount allowed, which changes as the account holder ages.
2. Not having an IRA for a non-working spouse of an employed spouse.
3. Withdrawing IRA funds to pay other expenses, like a mortgage or car payment, which incurs penalties.
4. Not updating the beneficiary designation after a major life event, such as marriage, divorce, or birth of child.
5. Creating a taxable event by naming a trust as the beneficiary for the IRA.
6. Failing to utilize the “stretch provisions.”
7. Not taking the required minimum distribution starting at age 70.5.

See Ken Moraif, The Seven Most Common IRA Mistakes People Make, Market Watch, Jan. 30, 2015.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.