Online financial advisors (possibly help me save for a Sheep Hunt)

[MThuntr]

Hey crew, I need some help with planning what to do with a small 401(k)/TSP inheritance and when to time the transfers for tax purposes.

Anyone have recommendations on potential financial advisors I could talk to?

 

[ismith]

Is it enough to build a time machine to get back to 2009 so you can load up on bitcoin? (no recommendations but here's a bump for your thread)

 

[jryoung]

I recently had to do some work on our 401K plan and this was an item that came up in discussion. Ultimately, the answer is.....it depends. It depends on how the plan was structured, who you are in relationship to the owner and what rules are for the plan. Below is a link to T Rowe who we just moved our plan to. Below that is what Fidelity says, which is a bit easier to digest. You'll need to get your hands on the plan rules first to get a bit better clarity of your options.

https://www.troweprice.com/content/dam/iinvestor/Forms/ProfitPensionPlanDistribution.pdf

Inherited 401(k): What to know if you're a 401(k) beneficiary | Fidelity

If you've inherited a 401(k) from a parent, spouse, or someone else, here are the rules to know.

www.fidelity.com

 

[LopeHunter]

Depending on the tax code in place at time of the death of the original holder, you may have to take RMDs or have to take withdrawals of the entire amount of the account over 10 years. First step is to determine what the code requires. If you fail to take the required withdrawal in the required time period then a 50% penalty may apply on the funds which were not properly taken on time.

If your inherited retirement vehicle has a 10 year window and the withdrawals will be a taxable event which is likely unless there is Roth treatment, try to estimate what your marginal tax rate will be for each year over those ten years when withdrawals need to be taken.

I just retired so my marginal Federal tax rate under current tax laws will dramatically decline starting 2025 so I am able to take withdrawals with a smaller tax hit than were my options in the past few decades.

Tax rates in the future might go up or down or stay the same, though, so will need to roll the dice by either action or inaction.

I presume Federal income tax rates will rise over the remainder of my lifetime so am trying to position our investments into holdings that pass to our beneficiaries at non-taxable items (Roth IRAs) or will get a step-up basis as I pass and my spouse passes so as much of the gain as possible will erased by death before goes to our beneficiaries.

Inflation also create a sizable "fake" gain on inflated value vs. original tax basis which can generate a significant tax hit.

I think inflation will increase due to the national debt increasing each year from spending more than collect plus expiring government bonds are being renewed at a higher interest rate.

I do not know for sure re tax rates or inflation so I am rolling the dice as I prefer action over inaction. I prefer to drive the car than be a passenger.