Your retirement account may be one of the most valuable things you own. Many people choose to name their children as the beneficiaries of these accounts. They think it is a way to easily transfer their wealth if something happens to them. But, that assumption is only partially true. Some factors make this type of transfer more complicated than you might think, especially if your child is a minor.
While an obvious advantage to a 401(k) and other qualified plans is the ability to take a deduction today and postpone paying taxes until tomorrow, it is clearly not the only advantage. Even more important is the ability to invest employee retirement funds on a tax-deferred basis. As a result, whether tax rates remain the same or increase, a 401(k) plan remains a valuable tax planning tool for small business owners.
