Are your clients handing their IRAs to the IRS?

6. Not taking advantage of net unrealized appreciation. If your clients have company stock, they can put it in a taxable account, and roll 401(k) assets into an IRA. They would pay taxes on the stock, and the difference would be paid only when they sell the shares.

7. Ignoring special age-related tax-breaks. Ten-year averaging allows investors who are 73 or older, or who have inherited a plan, to lower their liability if they need to make an early withdrawal. “The 10-year averaging tax is figured separately from your regular tax, and the income is not added to your adjusted gross income,” Casey writes. And, it won’t trigger the alternative minimum tax.

To qualify, investors must be born before 1936. The distribution must be from a qualified plan, like a 401(k), and the plan must be at least five years old. The distribution of the entire plan balance must be made in one tax year, and 10-year average can’t have been used in any distribution after 1986.

8. Allowing double taxation. In the past, the IRS taxed an inheritance, claiming it was “income that the decedent earned, but had yet to pay tax on,” Casey writes. If your clients inherit an IRA where a federal estate tax has been paid, they may be entitled to the “Income in Respect of a Decedent” tax break. The IRS created this exception to prevent double taxation on estate and income taxes; however, it doesn’t apply to state estate tax.

9. Allowing beneficiaries to roll over an IRA into their name. As mentioned previously, only spouses named as the sole beneficiary have that right. Should a non-spouse beneficiary roll over an inherited IRA into their name, the IRS considers it null and void, and all taxes are due.

10. Forgetting to take the money. As you know, investors must begin taking distributions once they turn 70 1/2 . If they don’t, they may be subject to a 50 percent penalty on the portion of their distribution that they didn’t take.