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Author: rebjib Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76080  
Subject: IRA & 401k beneficiary Date: 11/23/2001 8:34 PM
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Is it possible, or even a good idea to name one's living trust the beneficiary of one's IRA and 401k accounts.
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Author: pauleckler 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: 32655 of 76080
Subject: Re: IRA & 401k beneficiary Date: 11/27/2001 11:12 AM
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Possible, yes, but the income tax implications are severe. You would want to do that only if you had a carefully crafted strategy and a very good reason.

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Author: fsidgad Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 32657 of 76080
Subject: Re: IRA & 401k beneficiary Date: 11/27/2001 12:35 PM
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You say that the tax implications can be severe but you do not explain. Curious minds want to know.

JackBD

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Author: pauleckler 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: 32671 of 76080
Subject: Re: IRA & 401k beneficiary Date: 11/29/2001 8:16 PM
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IRA and 401K funds are not tax free; they are tax deferred. Whenever the funds are paid out of the accounts, the money over aftertax contributions is current taxable income and is taxed at current rates. If the account is large, that can easily be 39% Federal plus state and local up to 15% or so.

When individuals are beneficiaries, they usually get the opportunity to collect the money over a period of years--at least 5 years. That spreads out the tax load, can reduce the rate, and gives time to develop strategies to reduce income taxes due.

So get expert advice before making a trust beneficiary of those accounts.

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