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401k Beneficiary? Trust or Spouse?

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GrnPstrs

Guest
What is the name of your state? ARIZONA

My wife and I created a Revokable Living Trust in 1996. I also have a 401k with a sizeable (taxable) balance. I am not yet taking any distributions from the 401k.

How should I specify the beneficiaries of the 401k in order to minimize tax consequences to my wife if I should die first?

Should I make my wife "Primary Beneficiary" and the Trust "Contingent Benefiary", or should I do it the other way around - make my wife Contingent Benefiary and the Trust Primary Beneficiary?

Thank you very much for your consideration.
 


Dandy Don

Senior Member
Talk to a CPA or an accountant who specializes in estates/trusts to get a definitive answer to your questions. You must (or your accountant must) actually "work the numbers" to see which outcome will be best for your situation, and then consult with either your trust attorney or your probate attorney for their final opinion or input.
 

ALawyer

Senior Member
401(k) plans almost always should have individuals as beneficiaries. A spouse can inherit the 401(k) balance and continue to let the balance remain in a tax deferred rollover account and defer income taxes until 70-1/2 when she begins to make withdrawals.

If your estate is large what you probably need is a real estate plan with an A-B arrangement with your wife so that if you die and she inherits everything, and then she dies she can leave your kinds more than $1 million free of ESTATE tax.
 

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