Reply to Should 401ks be phased out?

Forum Index » Money and Finances

Reply to "Should 401ks be phased out? "

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]401k should not transfer tax liability to a new state. It is deferred compensation and should be taxed in the state where it was earned, like CA does for RSU awards.

[b]401k is for the MC/UMC, not the rich[/b]. 
[/quote]
I agree with this.  There are significant disadvantages with 401ks/IRAs - Withdrawals are taxed at future income tax rates (which are not known).  RMDs force you to withdraw and be taxed whether you need the money or not.  Inherited IRAs have to be liquidated [b]within 5 years [/b](at income tax rates).  You can't claim losses on investments in IRAs/401ks...

[/quote]

It's 10 years. [/quote]
Right -  401k is 10 years, IRA is 5 years.[/quote]

No, it's not.

It's possibly confusing because of a law passed in 2019, but for anyone who passed away in 2020 or later who is older than RMD age (so the most common scenario), a non-spousal beneficiary has 10 years to deplete the retirement account. If it is in a 401k, you are required to roll the money to an Inherited IRA (unless you are a spouse). If it's in an IRA, it also rolls to an inherited IRA.

The 5 year rule only came into play when the person who passed away was younger than RMD age, and the beneficiary did not begin taking distributions based on their own life expectancy right away. But this only applies for anyone who passed away before 2020, so it no longer matters. [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics