New York Estate Planning & Elder Law Blog
Not all investments are created equal. You investment portfolio may include a 401(k), individual retirement account, pension plan, or deferred compensation plan, among others investment vehicles. Whether your investment trust account is qualified under the Internal Revenue Code will determine the tax treatment of your contributions and withdrawals.
Qualified vs. Non-Qualified Investment Accounts
A tax-qualified account features the ability to contribute income to the qualified account and defer tax on the account funds. Typically, you must be 59 ½ to withdrawal funds from a tax-qualified account without penalty. Conversely, non-qualified accounts do not offer tax deferred treatment. When you withdraw funds from a tax-qualified account, your entire withdrawal will be taxable, as opposed to being taxed on only the growth of your non-qualified account. Qualified tax plans include, but are not limited to: