Non-spouse beneficiaries of IRAs and 401(k)s.In the Estate Planning Estate Planning The overall planning of a person's wealth, including the preparation of a will and the planning of taxes after the individual's death. Notes: Contrary to popular belief, estate planning involves much more than preparing a will, and it is not only for the article titled "Inherited IRAs" from the March/April 2004 issue of California CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. , the article should have indicated that a non-spouse must determine the life expectancy Life Expectancy 1. The age until which a person is expected to live. 2. The remaining number of years an individual is expected to live, based on IRS issued life expectancy tables. factor from the Single Life Table in the year following death and reduce it by one in each subsequent year. There is a 50 percent penalty for shortfalls in these calculations. Also, the article should have indicated that after-tax contributions to a 401(k) plan can be recovered tax-free first only if contributed before 1987 and separately accounted for by the employer. Generally 401(k) plan contributions are fully taxable upon withdrawal. Any basis created by post-1986 after tax contributions is recovered pro rata [Latin, Proportionately.] A phrase that describes a division made according to a certain rate, percentage, or share. In a Bankruptcy case, when the debtor is insolvent, creditors generally agree to accept a pro rata share of what is owed to them. . The same rules that apply to IRAs are used. |
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