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Just started my 401k, thoughts?
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<blockquote data-quote="Jackburton" data-source="post: 1218858" data-attributes="member: 34538"><p>I hope you guys remember that your pension will count towards your annual income, combined with a Roth401k your taxed amount stays the same. If you take the same pension and add into it the traditional 401k, this could put you into another tax bracket. Another thing to consider is Roth accounts are far better to be used as inheritance money than traditional 401k. The following gives some examples as to why, considering forced distributions. </p><p></p><p><a href="http://moneyover55.about.com/od/RetirementAccountWithdrawals/a/401k-Beneficiary-Inherited-401k-When-And-How-You-Can-Take-Money-Out.htm" target="_blank">401k Beneficiary – Inherited 401k - When and How You Can Take Money Out</a></p><p></p><p> Non Spouse 401k Beneficiary – If You Inherited a 401k Plan From Someone Other Than Your Spouse</p><p></p><p>If you are the beneficiary of someone’s 401k plan and they were not your spouse, there are three possible choices:</p><p></p><p></p><p>If The Person You Inherited From Was Over Age 70 ½</p><p></p><p></p><p>1. If the person you inherited the account from was over age 70 ½ and thus had already started taking required minimum distributions at the time of death, the rule is that you must, at a minimum, continue to take out at least these required minimum distributions, and if you desire you can take out more than this amount, but not less. You can take these distributions out over the longer of either the decedents life expectancy or your own, according to the IRS required minimum distribution life expectancy tables. You should have the option to do this by leaving the money in the plan or by rolling it over to an account titled as an inherited IRA.</p><p></p><p></p><p>If They Were Not Yet Age 70 ½</p><p></p><p></p><p>If the person you inherited the 401k plan from was not yet age 70 ½, the 401k plan will allow one or both of the options below:</p><p></p><p></p><p>2. The 401k plan may require you to take all of the money out of the plan no later than Dec 31 of the fifth year following the year of the person’s death. You could take a little out each year, or wait until the last year to take it all. You will pay regular income taxes on the amount withdrawn, so you may want to take more out in years where you expect to be in a lower tax rate.</p><p></p><p></p><p>3. The plan may allow you to take the money out in annual amounts over your life expectancy according to the required minimum distribution life expectancy tables. You may be able to do this by leaving the money in the plan or by rolling it over to an account titled as an inherited IRA. This option is often referred to as a "stretch IRA" because if you are much younger than the person you inherited from you can stretch the distributions out over a long period of time.</p></blockquote><p></p>
[QUOTE="Jackburton, post: 1218858, member: 34538"] I hope you guys remember that your pension will count towards your annual income, combined with a Roth401k your taxed amount stays the same. If you take the same pension and add into it the traditional 401k, this could put you into another tax bracket. Another thing to consider is Roth accounts are far better to be used as inheritance money than traditional 401k. The following gives some examples as to why, considering forced distributions. [url=http://moneyover55.about.com/od/RetirementAccountWithdrawals/a/401k-Beneficiary-Inherited-401k-When-And-How-You-Can-Take-Money-Out.htm]401k Beneficiary – Inherited 401k - When and How You Can Take Money Out[/url] Non Spouse 401k Beneficiary – If You Inherited a 401k Plan From Someone Other Than Your Spouse If you are the beneficiary of someone’s 401k plan and they were not your spouse, there are three possible choices: If The Person You Inherited From Was Over Age 70 ½ 1. If the person you inherited the account from was over age 70 ½ and thus had already started taking required minimum distributions at the time of death, the rule is that you must, at a minimum, continue to take out at least these required minimum distributions, and if you desire you can take out more than this amount, but not less. You can take these distributions out over the longer of either the decedents life expectancy or your own, according to the IRS required minimum distribution life expectancy tables. You should have the option to do this by leaving the money in the plan or by rolling it over to an account titled as an inherited IRA. If They Were Not Yet Age 70 ½ If the person you inherited the 401k plan from was not yet age 70 ½, the 401k plan will allow one or both of the options below: 2. The 401k plan may require you to take all of the money out of the plan no later than Dec 31 of the fifth year following the year of the person’s death. You could take a little out each year, or wait until the last year to take it all. You will pay regular income taxes on the amount withdrawn, so you may want to take more out in years where you expect to be in a lower tax rate. 3. The plan may allow you to take the money out in annual amounts over your life expectancy according to the required minimum distribution life expectancy tables. You may be able to do this by leaving the money in the plan or by rolling it over to an account titled as an inherited IRA. This option is often referred to as a "stretch IRA" because if you are much younger than the person you inherited from you can stretch the distributions out over a long period of time. [/QUOTE]
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Just started my 401k, thoughts?
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