401k's and the Pension Protection Act of 2006

My blog is not to be used as tax, legal, financial or any other business or personal advice. It is simply a forum where I discuss issues that come up in my daily practice so I can reflect on them.

I find most of my clients most significant asset (beside their home) is their 401k. It is one of the best games in town since the government lets you compound your returns on their money. What I mean by this is that you don't pay tax on this money until you take it out so you are earning on Uncle Sam's dollar. Given this fact, I am curious as to why people do not pay more attention to the rules regarding this asset. If you play your cards right, you may be able to extend the life of this asset beyond what you originally thought thereby potentially compounding your returns more efficiently than in any taxable account. Also, many people do not understand the different tax implications of desgingating different beneficiaries for this asset. ThePension Protect Act of 2006 has opened up some options for these types of retirement accounts. It would serve one well to take a look at this fairly new law.

For more information on Robert Feisee, JD, CFP(R) go to www.wealthlaw.net