401K
I have a 401K which I will be leaving to my sons when I pass. How is the tax calculated if they withdraw all of the funds, or can they keep it in the bank and pay as required?
Terry Says
If you’re no longer working at that company, I suggest you move the account into an IRA Rollover account at Fidelity or Vanguard. They will be better prepared to handle the transfer at your death. You just name the sons as beneficiaries.
If you’re still working, then name your sons as beneficiaries on your 40l(k) account. The HR department will help you do that and its very simple.
At your death, there will be rules (currently constantly changing) about when and how they must withdraw the funds. The account custodian will help them understand how much they must withdraw and when, based on the rules in effect at the time of your passing.
Just make sure you have those beneficiary forms filled out and given to the custodian of your retirement account!!
