Retirement assets are subject to a variety of taxesperhaps more so than any other asset. Consider:
–Distributions from a retirement account to the account owner during life are subject to federal and, in many cases, state income tax.
–If the account owner receives a distribution prior to age 59-1/2, then unless an exception applies, such distribution would be subject to an additional 10% penalty.
–Upon an account owners death, retirement assets are subject to estate tax to the extent such assets are not sheltered by the account owners estate tax exemption or do not qualify for the federal estate tax marital deduction.