LIFE INSURANCE AND ANNUITIES: REGULATORY MOMENTUM CONTINUES 

Your beneficiary form decides who gets your life insurance money, not your will. If the form is out of date, the money can go to the wrong person or get tied up in probate for months.

Life changes fast. A marriage, divorce, new baby, grandchild, or a death in the family can all mean your form no longer matches your wishes. Many people set their beneficiary once and never look at it again.

Take 10 minutes this month to check:

• Who is named? Make sure the names are current and spelled correctly.

• Is there a backup? Name a contingent (second) beneficiary in case your first choice dies before you.

• Are minor children named directly? Insurers usually can't pay a child under eighteen. A court may have to appoint someone to manage the money. A trust or custodian can avoid this.

• Did you divorce? Depending on your state, an ex-spouse may still collect if they're still listed.

• Is your coverage still enough? A new mortgage, a new child, or a raise may mean you need more.

If anything needs changing, call us at 786-970-0740. Most updates only take a short form.

ANNUITIES: DON'T MISS THE DECEMBER 31 WITHDRAWAL DEADLINE

If you're seventy-three or older, some annuities require you to take money out by December 31 each year. This is called a required minimum distribution, or RMD. Missing it can cost you a 25% IRS penalty. Whether the deadline applies to you depends on the kind of money you used to buy your annuity.

Annuities bought with retirement money ("qualified" or IRA annuities)

These are annuities bought with money that hasn't been taxed yet, such as money rolled over from a 401(k) or IRA. Many are bought directly from an insurer, with no separate IRA account. The annuity itself is the IRA. The IRS treats it like any other traditional IRA (IRS Publication 590-B).

• Age 73 and older: You must take a required minimum distribution (RMD) each year.

• Your first RMD: If you turn seventy-three this year, you have until April 1 of next year. But waiting means two withdrawals in one year, which could raise your taxes.

• Every year after: The deadline is December 31.

• The penalty: 25% of the amount you didn't take. It drops to 10% if you fix it within two years.

• Roth IRA annuities: No RMDs while the owner is alive.

Annuities bought with savings ("non-qualified" annuities)



These are bought with money you already paid tax on, like savings or a CD that matured. Federal RMD rules do not apply to them while you're alive. You can leave the money growing without a yearly withdrawal.

Two things can still require payouts:

• Your contract's maturity date. Many contracts set an age (often 90 to 100) when payments must begin. Check your contract.

• After your death. Your beneficiaries generally must take the money within a set time, often five years, or as payments over their lifetime.

Not sure which kind you have? Look at your annual statement. It often says "IRA," "qualified," or "non-qualified." If you're still not sure, call the insurance company that issued your annuity. The phone number is on your statement. They can tell you which kind you have and how much your RMD is. Many insurers can also set up automatic yearly payments, so you never miss one. For questions about taxes, talk with your tax preparer or financial advisor. December gets busy, so it's best to act before Thanksgiving.

This is general information, not tax advice. Talk with a tax professional about your situation.

LONG-TERM CARE: WHAT MEDICARE ANNUAL ENROLLMENT WON’T FIX

Medicare annual enrollment runs October 15 to December 7. It's a good time to review your health and drug plans. But no Medicare plan you pick will pay for long-term care.

Medicare says plainly that it "doesn't pay for long-term care." That includes help with daily tasks like bathing, dressing, and eating, whether at home, in assisted living, or in a nursing home. Medicare Supplement (Medigap) plans don't cover it either.

What this means for you:

• If you have long-term care insurance: Your policy fills a gap Medicare leaves open. Keep your premiums paid and keep a copy of your policy where family can find it.

• Know how to start a claim. Most policies require a doctor to certify you need help with daily activities. Many also have a waiting period before benefits begin.

• Tell a family member who your insurance company is and how to reach them. If you ever can't call yourself, they'll need to.

• If you don't have coverage: Long-term care is usually paid for by savings, or by Medicaid once savings run low. Ask us about your options.

Changes you make during annual enrollment start January 1 if your plan gets your request by December 7.

Questions? We're here to help

Call us at 786-9070-0740 or email pcholak@getinsuranceanywhere.com. We're happy to review your policy, update a beneficiary, or answer any question.

About Paul Cholak

Paul has over forty years of benefits experience and has been Director of Employee Benefits for large companies, as well as a benefits consultant with major consulting firms. He understands the life and health insurance needs of individuals and families of all ages. He also has considerable experience in selling life and health insurance to employer groups.

He guides you through the steps of getting insurance and is available to help you both BEFORE and AFTER you've made your purchase decision.