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Solo 401k Decedent/ Death Planning Questions
QUESTIONS:
When I die, everything passes to my wife. What has to be done so that she can continue to collect rents after I am gone?
Does everything in the Solo 401k Trust (ROTH) transfer to a ROTH IRA(w/ checkbook control) in her name and she can collect rents and pay expenses? Do real estate titles/deeds have to be changed?
And everything in the traditional solo 401k Trust transfers to a regular IRA in her name and she can sell the stocks whenever she wants or needs to ??
I want to make it as easy for her as I can so what should be done to make it as painless for her as possible ??
Would it be easier if I created a LLC for the real estate ?
ANSWERS:
Special rules (more advantageous than for non-spouse beneficiaries) apply when the beneficiary of the solo 401k is the spouse.
For example, if your wife is also self-employed, she will be able to transfer your solo 401k plan to her own solo 401k plan.
On the other hand, if your spouse is not self-employed, she can transfer your solo 401k to her own IRA LLC.
NOTE: under both of these scenarios, your solo 401k investment holdings (e.g., real estate, metals and notes, etc.) would get transferred in-kind to either her own solo 401k under the first example above, or to her own IRA LLC. Therefore, she would not need to liquidate any of these positions.
The solo 401k provider would assist with the transfer and government reporting under the above scenarios. For more on the solo 401k beneficiary rules, VISIT HERE.
Lastly, you may want to add your spouse as trustee of the plan to make it easier for her to transfer the funds upon your death.
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