Thursday, October 07, 2010

Tips on inheriting a 401(k), gift tax (from Mary Beth Franklin)

Here’s a video from Bukisa on what happens if you inherit a 401(k), a Kip Tip, with Kevin McCormally, of Kiplinger, talking to Mary Beth Franklin. In the past, only a spouse could keep the tax-deferral; now any named beneficiary can. Also, when you have to take it out isn’t necessarily at 70-1/2, it is based on your actuarial life expectancy.




Here is a Kiplinger article from the end of 2009 on a little known area, the gift tax, which could help prevent inheritance taxes, which could become more significant in 2011. The link is here. You have to be   concerned about look-back period rules, however, if you wind up needing long term care and have given away too much money.

The Washington Examiner today (Oct. 7) ran a Mary Beth Franklin article on p 23, “Your Money: The Bottom Line on 401(k)’s”. I couldn’t find it online yet. But she recommended being aware of the quality of your employer’s 401(k) plan, and if it is unfair, with too many retail fees, only allow the employer to deduct and match the minimum amount, and manage the rest yourself.

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