No. of Recommendations: 1
Frankxyz asked..

"1. Isn't that 'funding' a trust ?
2. what are the advantages/tax conseq. of doing this ?"

I think this in regards to my using a spillover type provision in my will to transfer my 401K to my trust upon my death.

My answer will be vague because my understanding is very vague.

I don't know the mechanics of this transfer. I am still very young and hope to refine this before I pass away. Also I pray that the inheritance tax will be abolished and if it is then I will not need this trust and will not transfer my 401K to it.

I am unsure at this point how the assets in my 401K will be handled upon my death. I have heard but have no idea of the facts that the funds can be moved into the trust and keep the tax shelter but some sort of distribution must begin. Otherwise the 401K is liquidated, income taxes are paid, and the remainder goes into to the trust.

Perhaps there are wiser people here to help with your questions.

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