June 2025 – Fraternal Benefits Message

Retirement accounts like 401(k)s, IRAs, and pension plans are often key components of

personal wealth. Properly integrating these into estate planning is crucial for efficient and tax-

effective wealth transfer to beneficiaries. One way of building your estate and legacy is through

a single premium whole life policy where you contribute a lump sum one time to a policy and

immediately create a tax free benefit. Another way is to annuitize a lump sum and have the

payout take care of your premiums on a life policy while you enjoy the remainder of your

planned retirement income. Some key factors to consider for planning your estate are the

following. Beneficiary designations: Ensure that your retirement accounts and life

insurance beneficiary designations are updated and align with your overall estate

planning goals. These designations usually take precedence over wills or trusts. Tax

implications: Different retirement accounts have varying tax treatments. For example,

heirs might owe income tax on traditional IRA or 401(k) distributions, unlike Roth IRAs

or Life Insurance. In certain situations, it is better to leave life insurance as you can

leave the same inheritance for pennies on the dollar, use the difference yourself, and

leave your beneficiaries tax free money. It’s important to understand these differences to

minimize taxes for beneficiaries. Spousal inheritance: Spouses inheriting retirement

accounts typically have more options, like rolling the assets into their own IRA, offering

greater tax-deferred growth potential. Rules for non-spouse beneficiaries: Non-spouse

beneficiaries, such as children, are subject to different rules, including mandatory

distributions that could impact the account’s tax advantages. Integrating retirement

plans and life insurance into your estate strategy ensures these assets are distributed

effectively and per your wishes. Tailoring these aspects of your estate plan can

significantly benefit your heirs. The Knights of Columbus can help you maximize your

options when planning your retirement and establishing what you want to happen. Give

me a call and let me know how I can help you best.

Ryan Janak – Field Agent

832-693-3160

Ryan.Janak@kofc.org