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We may be more than half a year away from tax season next year, but it is never too early to plan for the 2016 tax season. This is especially important if you are considering a new IRA or even contributing extra to your existing account. While IRAs are fairly common, there are a number of misconceptions that can lead an investor astray. With that said, this post will focus on clarifying a few of them

The beneficiary form is not important – To the contrary, the beneficiary forms that come with IRAs are very important. After all, it does more than just describe who will benefit from the IRA in the event the account holder passes, it also determines how the proceeds will be distributed and how they will be taxed.

401k plans and IRAs are the same  – If your employer offers a 401k plan, that is a great benefit in helping you build wealth. But it is not the same as an IRA. Employer 401k plans may have strict rules about withdrawals and loans, whereas IRAs offer a great deal more freedom; especially after you turn 59 ½ .

You need multiple IRAs – If you are accustomed to making annual contributions to an IRA, you may believe that you must put it into a new one each year. However, it is not necessary to create a new account each time you make a contribution. In fact, the fewer IRAs that you have, it will likely be easier to manage them.

If you have additional questions about how IRAs can help with your estate plan, an experienced attorney can help.