Q: I am the non-spouse beneficiary of a 401(k) plan. Do I have to take it all as one distribution and then pay taxes on it? I am 35 years old, and the person I inherited it from was 54 years old.
— F.D., Ocala
A: No, you do not normally have to take it all out in one sum. In general, you have three options:
•Roll it into an inherited IRA to stretch the required minimum distributions and resulting tax bill across your life expectancy.
•Withdraw of all the assets within five years; you will have to pay income tax on the withdrawal(s).
•Take out the assets immediately in a lump sum; the amount is reported as income, and taxes will need to be paid.
Be sure to speak to both a CPA regarding the taxes and a certified financial planner regarding the best option for your retirement plan.
— Lynne Strynchuk
Q: Do I need long-term disability insurance? My employer offers it, but the premium is rather expensive.
A: Unfortunately, disability income insurance is one of the most neglected areas of need for individuals in their personal insurance plans and yes, most people need it.
Due to what can be a great deal of financial exposure to the insurance companies, the premiums can be rather expensive. But it might be appropriate to put in place at least some coverage at a premium level that would fit your budget.
— Randy Harrison
Have a question? E-mail firstname.lastname@example.org. Include your name (only your initials will be printed), hometown and phone. Questions are answered by certified financial planners from the Central Florida chapter of the Financial Planning Association. Answers are for educational purposes only; you should also consult a financial professional. Questions and answers may be edited for space considerations.
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