Episode #32: Mailbag – 401(k) Rollovers & Leaving An Inheritance

Today’s Prep:

Have a few different old 401(k)s and want to simplify? Wondering if avoiding taxes is scam? Thinking about leaving an inheritance for your children? Listeners often send in their questions, so today David will answer these three questions from the mailbag.

(Click the featured times below to jump forward in the episode)

Equipping Points:

[0:25] Combining old 401(k)s

  • Michael in Lenexa has several old 401(k)s from companies he used to work for and is tired of getting the different statements. Can he combine them all and should he?
  • David shares a story about a couple who had 14 different 401(k) and IRA accounts which made it difficult to keep track of. It felt like there was no plan in place with how everything was scattered.
  • You can absolutely roll multiple plans over into one account, but you cannot combine it with a spouse’s plan.
  • There are several really good reasons to combine those 401(k)s, but you’ll want to do it the right way.

[2:39] Avoiding taxes

  • Freida in Independence says she has heard people advertising ways to avoid paying taxes, but it sounds like a scam. Is it?
  • You’re right to be cautious. There are ways to avoid paying some taxes in retirement, but you have to do it the proper way.
  • If you work for a company that offers a retirement plan match, you should get the match and then invest in your next best opportunity.
  • When seeking advice, you want to talk face-to-face, not over the computer or phone, in order to sort out the good ideas from the bad ones.

[4:40] Leaving an inheritance

  • Margaret from Leawood is worried about her kids who are in their 20s and might not have the same economic opportunities that she had. Should she try to leave them an inheritance?
  • First, make sure your retirement savings are used to cover you before you give any of it away.
  • Your kids have 40 years before they will retire, and they still have time to shape their retirement. Give your kids a good education and be a sound financial role model.
  • Take care of your own retirement, then worry about leaving an inheritance.

Today’s Takeaway:


More From David:

The host: David Dickens

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