restoreliberty Wrote:
Nov 30, 2012 11:23 AM
You are correct, if you are not working at age 70 and 1/2, you have to start taking mandatory distributions and paying taxes on the income earned. If you are still working, and not a 5% owner or direct relative of the owner (mother, father, son, daughter, wife, husband, etc. - all of which automatically make you a 5% owner whether you think you own any portion of the business or not) then you do not have to start taking mandatory distributions at 70 1/2. If your 401(k) passes on to anyone else after you other than your spouse (who will pay tax on distributions as well) like your children, they will pay all of this tax within five years of your passing. So, they already do collect taxes on 401(k) distributions.