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Question for the Money Doctors

Question submitted on Mar 6, 2014.

Question

I would like to retitle my fixed annuity and 403(b) and 457(b) accounts as joint ownership in the names of my two daughters. What are the pros and cons of doing this. These accounts are approx. 14 years old. Thank You.

Answer

Sorry, but you can't retitle these accounts to your daughter's names. These are both tax deferred accounts, which means that tax is due when withdrawals are made. You can withdraw the money, pay the tax on it (and penalty if you are under age 59 1/2), then gift it to your children if you'd like - and depending upon the size of the accounts, it is most likely to push you to a higher income tax bracket. There may also be some gift tax implications with that strategy also. Bottom line - the IRS will not allow you to retitle these accounts to someone else's name.


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