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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76078  
Subject: Re: 701/2 age stipulation Date: 1/28/2004 12:57 PM
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Greetings, ForHim210, and welcome. You asked:

My father is 70.5 which means he will have to move money out of his 401k plans. Does anyone know if you have to do that with one's Roth IRA as well.

No, unlike a traditional IRA or qualified retirement plans, minimum required distributions at age 70 1/2 do not exist for Roth IRAs. The money may stay there until heirs have to take it.

Anyway, I'm trying to figure out the best thing to do for him so that he is not hammered through taxes. Does anyone know what you can roll the money into or if it just has to be transferred to an after-tax account with a place like Freetrade or Ameritrade?

He will have to pay income taxes on the mandatory withdrawals. After all, that's the purpose of making him take them. The "gummit" let the money stay there untaxed all those years, so at age 70 1/2 it says the money must now come out so it can be taxed. If the money isn't needed immediately, then an after-tax long term, buy and hold investment is arguably "best" under today's tax laws.

Also I was told that it is helpful to start getting certain assets out of his name, such as his house, and have it put in a child's name (that would be me). I'm asking because he was recently diagnosed with Alzheimer's and I can see that his mind is slipping etc (very sad). Anyway, I want he and my mom to be provided for as well as I can and know that their expenses will increase as his disease gets worse. My mom is 8 years younger and in good health so I'm trying to think for her best too in that I want their money to last for them. Of course, I would try to help them financially if that were ever needed.

For a number of reasons putting assets into your name before your Dad passes on is normally a very bad move for you and your parents. In this case, given his advancing mental deterioration plus his and your mom's advancing ages, I strongly urge you to immediately seek the services of an attorney thoroughly familiar with the elder care laws of your state. At this stage of life, to protect your folks it sounds as if you will need various powers of attorney and/or revocable or irrevocable trusts. You now need someone well-versed in elder law to guide you through the legal thicket necessary to protect both you and your folks from various contingencies (e.g., income/estate/inheritance taxes, medical costs, etc.).

Lastly, I'm wondering if my dad's 401k money could be rolled tax free into my mom's name since she does not hit 70 for 8 years? Does anyone know the answer to that question? THanks for any help you can provide me.

NO, that could happen only if your father was deceased. In that event, she could have the remaining proceeds transferred into her own traditional IRA.

Hope that helps.

Regards...Pixy
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