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Financial Planning / Foolish 401(k)s


Subject:  Re: Any Help Appreciated Date:  7/8/2007  1:39 PM
Author:  foolazis Number:  22106 of 26157

What happens to your 401(k) if you have no named beneficiary and die?

It becomes part of your estate and is distributed along with your other assets. One gotcha with not having a named beneficiary is that the entire balance of the 401(k) must be distributed within 5 years, which can result in a serious tax hit for your heirs. A named beneficiary has the option to stretch the distributions over nis/her lifetime. You never want a 401(k) to just be left to your estate. Always designate a beneficiary or beneficiaries, but make sure that you keep track of your designation and review them periodically, just like you should review your will.

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