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Like most people, you’ve accumulated substantial retirement savings in your IRA or company retirement plan. But what happens when you retire, and you find yourself with sufficient sources of income to support your lifestyle wit

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

hout taking more than the minimum amount out of your IRA? Under current rules your beneficiaries can inherit your IRA and take out distributions over their lives while the principal continues to grow untaxed. This is the so ca

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

led “Stretch IRA”. To illustrate the power of this concept assume we have a husband and wife both aged 65 with a $150,000 IRA and a 35 year old daughter. Assuming an 8% return the value of that IRA over the life of the family

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

s over $1.6 million dollars! As good as this sounds most people make mistakes that cost their families hundreds of thousands, even millions of dollars. The sad part is that these mistakes can usually be avoided using simple st

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ps. This article will tell you the five most common IRA mistakes and how to avoid them.

• Mistake 1: Leaving Your Retirement Plan at your Company

Many people just leave their retirement plan at their company when they retire.

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

Unless the plan offers you investment options you cannot get on your own this might not be a good idea. While the IRA rules are quite clear on the ability of your heirs to take your money out over their lifetime many company p

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

ans don’t follow this logic. To avoid the added complexity they force your heirs to take the money out immediately, or within a short time period. This causes an immediate tax bill and the loss of years of tax deferred growth.

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

If you are determined to leave your plan at your company please call your benefits department and find out what happens to your plan balance when you pass away.

• Mistake 2: Assuming Your IRA Custodian Knows What You Want

Ma

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

y IRA custodians will unknowing mess up your IRA distribution plans. An example will illustrate the point. Let’s say you have a son, Harry, and a daughter, Jane. They are the primary beneficiaries of your IRA. If Harry prede

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

eases you, you would probably want his share to go to his family. However, many IRA custodians would give his entire share to Jane, freezing Harry’s family out completely. How can you avoid this? Call your IRA custodian and f

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

nd out how they handle this issue. If you don’t like the answer your attorney can prepare a document called a retirement asset will which will set forth exactly what you want to happen with your IRA.

• Mistake 3: Taking More T

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

an the Required Minimum Distribution

Once you turn 70 ? you are required to start taking money out of your IRA. However, after age 59 ? you are allowed to take money from your IRA without penalty (income taxes still apply). T

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

is leaves many people with a dilemma, just because you are allowed to take money out does that mean that you should? In most cases the answer is no. The longer you can leave this money to grow without tax the better. If you n

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ed to supplement your income and have other assets it is usually best to use those first.

• Mistake 4: Forgetting About Estate Taxes

We have a saying in our office “if you like income taxes you are going to love estate taxes”.

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

That’s because the highest income tax rate is the lowest estate tax rate. If you are subject to estate taxes and your children must use your IRA to pay them then that money is double taxed. Taxed in your estate and taxed as

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

ncome when they take it out. The bottom line is you could end up leaving 70% of your IRA to the IRS instead of your children. If you are subject to estate taxes there are a number of strategies to keep this from occurring.

•

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

istake 5: Not Converting to a Roth IRA

A Roth IRA allows your IRA to grow tax free over your lifetime and the lifetime of your children. Compared to a traditional IRA this is a financial “home run” for your family. However, m

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

st people choose not to convert because of the up front tax bill. There are two answers to this concern. First, since your IRA has probably declined in value now would be the perfect time to convert, and any future appreciatio

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

would be tax free. Secondly, there are little known strategies to spread the conversion tax out over your lifetime.

Whatever you do it’s important to know your options and properly plan to preserve your IRA assets for future

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

enerations. Today, with the proper planning, you have the potential to keep your IRA money growing tax deferred during your lifetime, and create a financial legacy you can pass on to your children, and even your grandchildren

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Prospects ask all sorts of questions when they meet you. Find out which question you should NEVER answer and how to use my very own Kung Fu script for avoiding the question and setting yourself up for closing the sale.

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