Sponsored By
Trusts & Estates logo

Stretch ThisStretch This

A complete liquidation of a person's retirement account can trigger a huge income tax liability, significantly diminishing assets available for investment. For example, a person who withdraws $100,000 from a 401(k) plan will have to report $100,000 of taxable income, producing combined federal and state income taxes of roughly $40,000 and leaving only $60,000 to invest. Had the $100,000 stayed in

Christopher R. Hoyt, Professor of Law

February 1, 2006

20 Min Read
Wealth Management logo in a gray background | Wealth Management

Christopher R. Hoyt, professor, University of Missouri (Kansas City) School of Law, Kansas City,

A complete liquidation of a person's retirement account can trigger a huge income tax liability, significantly diminishing assets available for investment. For example, a person who withdraws $100,000 from a 401(k) plan will have to report $100,000 of taxable income, producing combined federal and state income taxes of roughly $40,000 and leaving only $60,000 to invest. Had the $100,000 stayed in the plan, the $40,000 would have generated significant investment income, but the taxation of the distribution permanently deprived the individual of that revenue. Over 16 million people have received lump sum distributions and less than half rolled o...

Unlock All Access Premium Subscription

Get Trusts & Estates articles, digital editions, and an optional print subscription. Choose your subscription now and dive into expert insights today!

Already Subscribed?

About the Author

Christopher R. Hoyt

Professor of Law, University of Missouri

Christopher R. Hoyt, JD is a Professor of Law at the University of Missouri Kansas City School of Law where he teaches courses in the area of federal income taxation and business organizations.  Previously, he was with the law firm of Spencer, Fane, Britt & Browne in Kansas City, Missouri.  He received an undergraduate degree in economics from Northwestern University and he received dual law and accounting degrees from the University of Wisconsin.

Professor Hoyt has served as the Chair of the American Bar Association’s Committee on Charitable Organizations (Section of Trusts and Estates) and is on the editorial board of Trusts and Estates magazine. He is an ACTEC fellow, has been designated by his peers as a “Best Lawyer”, and was elected to the Estate Planning Hall of Fame by the National Association of Estate Planners & Councils.  He is a frequent speaker at legal and educational programs and has been quoted in numerous publications, including The Wall Street Journal, Forbes, MONEY Magazine, The New York Times and The Washington Post