UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next
Author: snoopy33 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76238  
Subject: 401K Success Tax Date: 2/20/1998 6:58 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Hello there,

On my quest to become Foolish, I've been thinking
about the Fed's 'Success Taxes' ...

Has this been discussed here with possible
approaches to Foolish 401K/IRA planning
with regards to minimizing/eliminating the
success tax?

For those of you not familiar with the tax,
it affects people in two ways:

1. It penalizes people who through the use
of tax favorable plans (such as a 401K)
accumulate wealth beyond what the
government thinks is reasonably required
for a comfortable retirement.

Under current legislation, withdrawls and
payments from all pension and retirement
accounts that exceed $160,000 per year
(this is the 1997 level indexed for inflation)
suffer a 15% excess-distribution tax.

2. The second way the law affects retirees
is the excess-accumulation tax where
it becomes effective when a retiree dies
with an account the government deems
'too much money'. Currently, it's
approximately $1.2 million for a 65-year
old and $1 million for a 75-year old.

Amounts over this will result in a 15%
tax hit. This only affects sigle people
as excess-accumulation tax can be
deferred if assets are transferred to a
surviving spouse.



Any comments?


snoopy33@rocketmail.com
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Value Hounds

Considerable Headwinds for Profire Energy?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement