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Author: RetireAtFifty Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Distribution of a 401k Date: 8/28/2006 8:09 PM
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Hi,
My wife (age 31) was recently willed a small 401k. We could:
1) do nothing, let it accumulate tax deferred
2) transfer it to her name, let it accumulate tax deferred
3) withdraw it to build a summer home

I'd like some good advice what to do. OK, before you start, I am not giving it to you or your favorite charity. Also, we already have large retirement account - I've been contributing into a 401k since I was 23. And we have several rental properties and a little after tax money in the stock market.

Do she need to start taking Minimum Required Withdraws by Dec of the year following the death?
Why should she transfer it into her name?
If we withdraw it, I think I'd do it half this year and half in Jan '07, for regular income tax purposes. (Last year, because of smart tax planning, I paid $84 total in federal taxes.)

Mike
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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53381 of 74759
Subject: Re: Distribution of a 401k Date: 8/28/2006 8:38 PM
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RetireAtFifty: "(Last year, because of smart tax planning, I paid $84 total in federal taxes.)"

First, I assume that you mean federal income taxes, and not all federal taxes.

Second, was AMT an issue?

Third, if I may be so bold, how to you limit your federal income tax liability to only $84 and still support yourself and your spouse?

Curiously, JAFO




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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53382 of 74759
Subject: Re: Distribution of a 401k Date: 8/28/2006 9:24 PM
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RetireAtFifty: "(Last year, because of smart tax planning, I paid $84 total in federal taxes.)"

First, I assume that you mean federal income taxes, and not all federal taxes.

Second, was AMT an issue?

Third, if I may be so bold, how to you limit your federal income tax liability to only $84 and still support yourself and your spouse?

Curiously, JAFO


Do you mean that you paid $84 on top of what was withheld? Cause if thats the case you paid more than that, but simply never saw it because it was taken off the top

WRJ

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Author: RetireAtFifty Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53383 of 74759
Subject: Re: Distribution of a 401k Date: 8/28/2006 10:59 PM
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Hey, are you guys tax auditors?

I paid $84 total federal income taxes. When I first calculated it, I thought I'd be going to jail :-) But it's all legit.

First let me say we live an incredibly frugal lifestyle, one that would make Jeremy Segal, author of "The Millionaire Next Door", jealous. Also, I have almost $1,000,000 in mortgage debt.

We read an interesting article about how to not keep up with the Jones's. We budget $1000 / month for food and $1000 for EVERYTHING else (natural gas, electric, cable, toys, clothes, vacations (camping), gas and oil, etc.). We don't have a lawn service, our cars (which we bought used) are paid off, we pack lunches when we go anywhere - like the zoo, and our non-mortgage debt is mostly at 0% (we get a new 0% card each year). We shop online, expecially Ebay (I'm writing this on a $1400 Dell dual core laptop I got new for $661!) My wife is an AWESOME garage sale shopper, and her and I are on the same page with regard to expenses. We bake our own bread, mend our own clothes (when was the last time you heard someone do that!), grow our own vegetables, and have sex for entertainment! BUT, I am an software engineering manager with a good salary, and throttle my desires for more stuff / junk that we don't need. I like to shop at my neighbors garage sales - they have the best stuff a few years old that is hardly used.

OK, here are the details...In 2004, I refinanced two townhomes that are rental properties with 80% LTV, and bought a $400k home at 80% LTV. I was going to list approximate deduction amounts, but decided that was too personal, so here are the highlights...

Big deductions:
- property taxes (3 properties)
- interest paid (3 properties)
- rental property depreciation on a 27.5 year depreciation schedule (I am deferring taxes on this, and will have to pay tax on this when I sell the properties)

Medium deductions:
- principal paid on rental business (a cost of having the property, does not include primary residence)
- expenses for rental business (advertising, cleaning, maintenance, repairs, association, milage, etc.)
- points paid on 1 primary residence purchase, 1 primary residence refi (hey, interest rates were lower), and 2 rental property refi's)
- 401k contributions

Small deductions:
- cash contributions to church and K-Love ratio station (non-profit)
- non-contributions to amvets, salvation army, church
- $3,000 per year for previous stock losses (max allowed) (from dot-bomb crash) (and why I joined TMF this year - did you know your TMF subscription is tax deductable?)

Add on top of that my wife doesn't work, and we have three kids five and under (who don't care if they have garage sale clothes and toys). We don't have day care expenses, and my wife makes her own games and crafts for our kids - she is AWESOME! and a major part of why we are successful.

Now that I have YOUR attention, can I get feedback on MY question???

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53385 of 74759
Subject: Re: Distribution of a 401k Date: 8/28/2006 11:24 PM
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First let me say we live an incredibly frugal lifestyle, one that would make Jeremy Segal, author of "The Millionaire Next Door", jealous.

Jeremy Segal [sic] didn't write The Millionaire Next Door. It was written by Thomas Stanley and William Danko. And I doubt that it would make them jealous.

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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53386 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 1:43 AM
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1) do nothing, let it accumulate tax deferred
2) transfer it to her name, let it accumulate tax deferred
3) withdraw it to build a summer home


I believe with any retirement plan other than a ROTH IRA, distributions are required.

If you do not transfer it to the wife's name, who's name is it in? I don't think it can stay in the name of whoever willed it.

Personally, I'd let it continue to grow tax defered, or perhaps roll it over to a Roth IRA if income allows.

Regarding your income taxes, I asked only because I know many people my age (23) who get a tax refund and think that they didn't "have" to pay taxes like I do (from investments). Just because they don't write a check each April doesn't mean that they didn't pay.

WRK

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Author: lethean Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53387 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 2:08 AM
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<<<First let me say we live an incredibly frugal lifestyle, one that would make Jeremy Segal, author of "The Millionaire Next Door", jealous. Also, I have almost $1,000,000 in mortgage debt.>>>

Now that's funny!!!!!!



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Author: RetireAtFifty Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53388 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 2:37 AM
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Sorry, Stanley and Danko wrote "The Millionaire Next Door". Siegel wrote "Stocks For The Long Run".

<<< <<<First let me say we live an incredibly frugal lifestyle, one that would make Jeremy Segal, author of "The Millionaire Next Door", jealous. Also, I have almost $1,000,000 in mortgage debt.>>>

Now that's funny!!!!!! >>>

Yes, and my assets are 20% of $1M, plus recent appreciation, 401k, IRA, etc. I do need to create a business entity to get the debt - and the liability - out of my personal name. Often I get a hard time from banks when I use Other People's Money to do investing because of a high debt-to-income level.

But that is a story for another discussion board...

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Author: RetiredVermonter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53389 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 6:52 AM
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I have almost $1,000,000 in mortgage debt. And $1,000/month for food, too? Whew.

Sorry, but I laughed at that, too. Guess we're missing something.

I do hope and pray for his sake that the projected worsening slump in real estate values doesn't take hold too badly!

By the way, we live frugally, too, and have paid ZERO income taxes, state or federal, for the past two years. But we spend a lot less on food, and mortgage debt is very, very low.

Vermonter

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Author: clifp Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53390 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 7:41 AM
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It sounds like more ~$700K of his mortgage debt is in rental properties, which is an investment not an expense. Now if his mortgage was $1,000,000 on his own house than wouldn't be frugal.
$1,000 a month for a family of 5 is $6.67 per person per day for food, not exactly a steak and Cabernet budget.

Now to answer his question. Given your very low marginal tax break, you should definitely take advantage of converting the inherited 401K into an Roth IRA if allowed (I think it is but not sure of all of the rules.)
In fact I would attempt to convert any other IRAs into Roth until you start to get into the 28% bracket.

Eventually, you will have to either pay taxes for the depreciation, or do 1031 exchanges and your taxes will rise. IMO (more like hope) I expect to see the rules on 1031 exchanges continued to be tightened... but then I've been wrong about that in the past.



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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53391 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 8:24 AM
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RetireAtFifty: "Hey, are you guys tax auditors?"

Not me; just curious.

"I paid $84 total federal income taxes. When I first calculated it, I thought I'd be going to jail :-) But it's all legit.

First let me say we live an incredibly frugal lifestyle, one that would make Jeremy Segal, author of "The Millionaire Next Door", jealous. Also, I have almost $1,000,000 in mortgage debt."


Not sure what frugal expenses have to do with tax liability, that could just be me.

"We read an interesting article about how to not keep up with the Jones's. We budget $1000 / month for food and $1000 for EVERYTHING else (natural gas, electric, cable, toys, clothes, vacations (camping), gas and oil, etc.)."

I presume that debt service is not covered by the 2k/month?

"OK, here are the details...In 2004, I refinanced two townhomes that are rental properties with 80% LTV, and bought a $400k home at 80% LTV. I was going to list approximate deduction amounts, but decided that was too personal, so here are the highlights..."

I understand.

"Big deductions:
- property taxes (3 properties)
- interest paid (3 properties)
- rental property depreciation on a 27.5 year depreciation schedule (I am deferring taxes on this, and will have to pay tax on this when I sell the properties)"


Ok. But you do recognize incoe from the rental property, right?

"Medium deductions:
- principal paid on rental business (a cost of having the property, does not include primary residence)
- expenses for rental business (advertising, cleaning, maintenance, repairs, association, milage, etc.)
- points paid on 1 primary residence purchase, 1 primary residence refi (hey, interest rates were lower), and 2 rental property refi's)
- 401k contributions"


I am no tax guy, but the first sounds incorrect. Principal payments are are not generally deductions, because loan proceeds are not income. Also, the thrid sounds incorrect WRT to refi points. I know for a primary residence, refi points are capitized and amortized over the life of the loan (unless reapi early, in which case the balance of the points are deducted. I am unsure about the application to investment properties.

"Add on top of that my wife doesn't work, and we have three kids five and under (who don't care if they have garage sale clothes and toys). We don't have day care expenses, and my wife makes her own games and crafts for our kids - she is AWESOME! and a major part of why we are successful."

Extra exemptions and credits.

"Now that I have YOUR attention, can I get feedback on MY question???"

I would if I could. My best suggestion is to ask ont he tax board, which is where the tax pros reside.

Regards, JAFO




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Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53392 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 8:35 AM
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RetireAtFifty: "Did you know your TMF subscription is tax deductable?)"

Yes, as a miscellaneous deduction to the extent that it exceeds 2% of AGI, IIRC. Deductible and worth money in my pocket are two different things.

I have been around TMF for a long time, and have been fortunate in that I have not incurred any subscription expenses. The regular subscription for a basic membership would not exceed 2% of my AGI.

Regards, JAFO




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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53393 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 8:52 AM
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My wife (age 31) was recently willed a small 401k. We could:
1) do nothing, let it accumulate tax deferred
2) transfer it to her name, let it accumulate tax deferred
3) withdraw it to build a summer home


Actually, since she was not married to the person she inherited from, I believe your choices are:
1) Refuse the 401(k) - it would then go into the deceased's estate to be distributed in accordance with the will
2) leave it with the current administrator, but change the name on the account to your wife's; then start RMDs the year following the death. It cannot be left in the deceased's name if she is going to accept it.
3) Withdraw it in distributions greater than the RMDs - you could still invest it, just not tax deferred, or you could use it to build a home, or you could spend it some other way.

The law that would allow your wife to rollover the account as a non-spousal beneficiary does not take effect until 2007.

Some considerations to think of:

If you are not residents of the state where the deceased was a resident, you may be required to pay state taxes on the distributions and file non-resident tax returns for that state. (YMMV - the state happened to be the administrator of the 401(k) I inherited, so there was no way to get by the state tax issue.)

Does the current plan have choices that are acceptable to you for investment? What are the expenses for the current plan?

Personally, when I determined that I was going to have to file non-resident tax returns for however long I was going to take distributions, along with some other tax considerations that would drop the cost of the state taxes where the 401(k) was administered for this year only, I decided to take the entire distribution this year.

AJ


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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53394 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 8:56 AM
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Now to answer his question. Given your very low marginal tax break, you should definitely take advantage of converting the inherited 401K into an Roth IRA if allowed (I think it is but not sure of all of the rules.)

Rollovers for non-spousal beneficiaries of 401(k)s are not allowed until 2007. The OP's wife inherited a year too early to take advantage of the change in the law. See this article: http://www.gfn.com/indexArticle.cfm?channelDesRecordID=288 It is slanted toward same-sex couples, but the rules apply to all non-spousal beneficiaries of 401(k)s.

AJ

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Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53395 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 11:52 AM
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If you are not residents of the state where the deceased was a resident, you may be required to pay state taxes on the distributions and file non-resident tax returns for that state. (YMMV - the state happened to be the administrator of the 401(k) I inherited, so there was no way to get by the state tax issue.)

Do you happen to have any links to information about this? I tried looking it up on the internet and all I could find was a vague post saying that the tax laws had changed in the early 90's so this was no longer true.

For the OP: there are some advantages of the inherited IRA that you might want to factor into your decision in case you can't easily roll it into a Roth.

1) It may provide some bankruptcy protection if housing collapses. IMHO, most of any pain will probably be felt by people using adjustable mortgages, with negative cash flow, or bad luck and are forced to sell at the wrong time. This may not be very likely for you.

2) If you retire early, to can withdrawal it before 59.5.

3) It can someday be passed on to your kids if you never need it.

If it were me, I'd probably just put it into a low cost index fund, set up the RMD's to be done automatically, then forget about it until the kids are in college then maybe use it for their education if it makes tax sense then. They may to be too young to really remember Great Grandma or whoever left the IRA, but it might help with a feeling of connection to the family.

Greg


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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53396 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 12:08 PM
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"Big deductions:
- property taxes (3 properties)
- interest paid (3 properties)
- rental property depreciation on a 27.5 year depreciation schedule (I am deferring taxes on this, and will have to pay tax on this when I sell the properties)"


Ok. But you do recognize incoe from the rental property, right?


It's possible to have positive cash flow while having a loss for tax purposes. These losses can offset other taxable income, but the losses that can be deducted are subject to limitations. See "Losses From Rental Real Estate Activities" from IRS Publication 527:
http://www.irs.gov/publications/p527/ar02.html#d0e4255

"Medium deductions:
- principal paid on rental business (a cost of having the property, does not include primary residence)
- expenses for rental business (advertising, cleaning, maintenance, repairs, association, milage, etc.)
- points paid on 1 primary residence purchase, 1 primary residence refi (hey, interest rates were lower), and 2 rental property refi's)
- 401k contributions"


I am no tax guy, but the first sounds incorrect. Principal payments are are not generally deductions, because loan proceeds are not income. Also, the thrid sounds incorrect WRT to refi points. I know for a primary residence, refi points are capitized and amortized over the life of the loan (unless reapi early, in which case the balance of the points are deducted. I am unsure about the application to investment properties.


My understanding is the same as yours on these two points, but I'm not a tax expert either.

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53397 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 12:49 PM
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Do you happen to have any links to information about this? I tried looking it up on the internet and all I could find was a vague post saying that the tax laws had changed in the early 90's so this was no longer true.

No, all I have is a hard-copy letter from the state, who is also the administrator of the 401(k), because my father was a local government employee. However, it's their rules and they are the ones who enforce the rules, so I'd rather be safe than sorry and will pay the taxes. If the OP's wife's inherited plan is adminstered by a financial institution rather than a state, this may not be enforced, so as I said, YMMV.

AJ

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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53399 of 74759
Subject: Re: Distribution of a 401k Date: 8/29/2006 4:15 PM
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"Medium deductions:
- principal paid on rental business (a cost of having the property, does not include primary residence)
- expenses for rental business (advertising, cleaning, maintenance, repairs, association, milage, etc.)
- points paid on 1 primary residence purchase, 1 primary residence refi (hey, interest rates were lower), and 2 rental property refi's)
- 401k contributions"

I am no tax guy, but the first sounds incorrect. Principal payments are are not generally deductions, because loan proceeds are not income. Also, the thrid sounds incorrect WRT to refi points. I know for a primary residence, refi points are capitized and amortized over the life of the loan (unless reapi early, in which case the balance of the points are deducted. I am unsure about the application to investment properties.

My understanding is the same as yours on these two points, but I'm not a tax expert either.


I'm going to agree with you on that too. The depreciation deduction is what accounts for the cost of purchasing a property. If you have a 30 year mortgage and take a (roughly) 30 year deprecation schedule, you are basically deducting the cost of the building twice.

Say you purchase a $250,000 building. If over 30 years you deduct $250,000 in principal AND $250,000 in deprecition, you have a basis of minus $250,000. In general you can't have a negative basis on any asset.

WRJ

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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53422 of 74759
Subject: Re: Distribution of a 401k Date: 8/30/2006 12:58 PM
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Hi,
My wife (age 31) was recently willed a small 401k. We could:
1) do nothing, let it accumulate tax deferred
2) transfer it to her name, let it accumulate tax deferred
3) withdraw it to build a summer home

I'd like some good advice what to do. OK, before you start, I am not giving it to you or your favorite charity. Also, we already have large retirement account - I've been contributing into a 401k since I was 23. And we have several rental properties and a little after tax money in the stock market.
- RetireAtFifty | Date: 8/28/06 8:09 PM | Number: 53380

I would suggest option (1) or (2), however, you did not mention how the inherited 401K is invested. I retired from the Investment Management profession at 51 - not 50. Your goal is a little more ambitious than mine was. Actually, I still work (volunteer) but I do not get paid.

Kahuna,CFA



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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53423 of 74759
Subject: Re: Distribution of a 401k Date: 8/30/2006 1:03 PM
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"RetireAtFifty: "Did you know your TMF subscription is tax deductable?)"

Yes, as a miscellaneous deduction to the extent that it exceeds 2% of AGI, IIRC. Deductible and worth money in my pocket are two different things.

I have been around TMF for a long time, and have been fortunate in that I have not incurred any subscription expenses. The regular subscription for a basic membership would not exceed 2% of my AGI.
- JAFO31 | Date: 8/29/06 8:35 AM | Number: 53392

I sometimes get a free year subscription from Tom & David Gardner to TMF. I kind of like it here.

Kahuna,CFA

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Author: GromitJS Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53433 of 74759
Subject: Re: Distribution of a 401k Date: 8/30/2006 11:57 PM
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Mike,

Wow I'm amazed at all the misinformation created from replies to the original post asking what to do if you inherit a non-spouse 401k.

ATTENTION FOLKS:
Within the new pension law recently passed this month was a new rule allowing a non-spouse 401k beneficiary to spread the distribution over his/her lifetime by rolling the inherited 401k into an IRA... this new law makes distribution rules for non-spouse 401k beneficiaries similar to the existing distribution rules for non-spouse IRA beneficiaries. As is typical with new tax law there is confusion... does this new law apply only to 401k accounts inherited beginning in 2007, or does it apply to existing inherited 401ks accounts that have yet to take a distribution. I recently asked a Fidelity specialist this question, and he said even their experts aren't sure what the answer is. Hopefully, there will be some technical corrections issued by congress/treasury concerning this issue. (my guess is the new law will apply to existing inherited 401k accounts, so Mike this new law may apply to your factual situation)

If the new law does not apply, the #1 most important thing you need to do is figure out what the 401k plan's rules are relating to non-spouse beneficiaries... contact the 401k plan's administrator! Many plan's are written so that a non-spouse beneficiary must take an immediate lump-sum withdrawal of the entire 401k account. If you're lucky, the plan will allow you to defer withdrawal for up to 5 years after the original account owner's death (5 years is the maximum allowed deferral period per tax law/regulations)

In summary:
If the new law applies to the original post's facts (401k account inherited in 2006), the beneficiary owner could rollover the inherited 401k into an IRA and then spread the distributions over his/her lifetime.

HOWEVER if the new law doesn't apply, then all the reply posts suggesting rolling the inherited 401k account into an IRA or Roth IRA are just flat wrong... you can't do that under old tax law. It's VERY important to determine what are the 401k plan's non-spouse beneficiary distribution rules... at most you'll be allowed a maximum 5 year deferral before full distibution must occur, but the plan may require immediate distribution.

Gromit

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Author: GromitJS Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53434 of 74759
Subject: Re: Distribution of a 401k Date: 8/31/2006 12:07 AM
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Another issue about specific language used in the original post:
...My wife (age 31) was recently willed a small 401k.

Technically the 401k account's "beneficiary form", not the "will", is the controlling document of determing who receives the 401k account upon the death of the original account owner. If there is a difference between the name on the "beneficiary form" and the name on the "will" as to who receives the 401k account, the "beneficiary form" overrides the "will".

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Author: GromitJS Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 53443 of 74759
Subject: Re: Distribution of a 401k Date: 8/31/2006 4:12 PM
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Another bit of misinformation in this thread:
If you take distributions from a 401k it doesn't matter where you worked or where the original account owner worked if you inherit a 401k... for state tax purpose a 401k distribution should be reported as taxable income only in the state where the person receiving the distribution CURRENTLY resides.

The location of employment while creating the 401k, the 401k administrators location, and the former employers company location have no impact on determining which state gets to tax the 401k distribution.

I think there was recent federal legislation that exactly addressed this issue... there has been lots of tax battles historically over this issue, but as for as I know the law now is pretty clear.

Gromit

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