Magazine article Medical Economics

Q & A: Money Management

Magazine article Medical Economics

Q & A: Money Management

Article excerpt

A tax break if you inherit a 401 (k)

My father died recently and I'm the sole beneficiary of his $550.000 401(k) account. He was only 57 and hadn't begun taking distributions. The plan administrator says I must withdraw the account's entire balance over the next five years, but if I do I'll get hit with a huge tax bill. Is there any way around this?

Yes, thanks to a provision in the new pension law. But to take advantage of it you must make sure the plan doesn't send a check for the proceeds to you in your name. Instead, set up a new IRA account to receive the funds. The account ride should include your father's name, the date he died, and state that it's for your benefit. Then have the plan transfer the money from your father's 401(k) direcdy into the IRA. If the administrator insists on cutting a check instead, have him make it out to your new IRA account, not to you.

Effectively you'll be creating an "inherited IRA." You'll have to start taking distributions within a year after your fathers death, but you can do so gradually based on your life expectancy rather than over five years.

What trading halts mean to investors

Why do stock exchanges sometimes halt trading on certain securities?

Often it means the company is about to release news that could significantly affect the stock's price, such as an earnings report that's better or worse than expected. The exchange temporarily stops trading to give investors a chance to absorb the information and decide how to respond. A halt can also signal that far more investors are interested in buying the stock than selling it, or vice versa, or that the exchange isn't sure the security still meets its listing standards. …

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