Here is a mistake that I've heard a couple of people make recently in reference to their IRA that I had to pass on to you. It's something I wouldn't have thought of because it's an assumption by most that it is simply taken care of.

There is nothing worse than working hard to invest in your retirement and find out that you made a mistake that could count you a lot of money.

Do you know what that mistake was? The owner of the IRA didn't name a beneficiary to the account. Now the people that told me about this said that it had cost them thousands of dollars as result of this one error. When I checked into it, I found that for some it could literally cost in the millions if your estate holds that much.

Now if the beneficiary is a spouse they can of course simply take over the account. Someone other than a spouse is required to take the minimum payout, but over their life expectancy, which of course is a great tax break.

What if you name no beneficiary? The IRA must go through probate and literally be drained within a 5 year period.

The point is if you receive the account after probate you must take out the money over a five-year period giving you huge tax liabilities that drains the principle. But if you were able to stretch out the amount over the rest of your life in the tax-sheltered account accumulating year after year, it would grow into a nice nest egg for your retirement years.

So if you are planning on turning your IRA over to someone to give them great benefit for their lifetime, make sure that you have assigned the account to them as the beneficiary. To not do so is to rob them of huge benefits over their entire life.