Couple worry about tax on inheritance for son

Dear Bruce: My husband and I retired early and hopefully we will not have to access our 401(k)s for living expenses during our lifetimes. We have about $700,000 combined in two accounts. My question is, when we pass away, what will the tax burden be for our only son? Of course, this is pretax money. Also, should we move any into another vehicle to help offset? — K.M.

Dear K.M.: I wouldn’t concern myself too much about trying to shift accounts to save money. On the other hand, with $700,000, you can certainly afford to buy the resources of an investment adviser and ask him what (if anything) you can do to help your son avoid taxes. As you pointed out, it is pre-tax money, but the thing is, this is your money for you to use to your benefit. Take a vacation and enjoy yourself. You worked hard.

Dear Bruce: The hamburger chain Wendy’s has begun selling its products through self-service kiosks. This move reduces personnel as labor costs rise to cover Obamacare amid the social media movement to raise the minimum wage to $15. Responsible business columnists like you said employment reductions would be a necessary consequence of higher labor costs. Now there will be fewer kids making fast food at Wendy’s. Do you expect a future in self-service fast food? — Reader

Dear Reader: I think there is a future in self-service. Do I think there will be fewer people employed and those who are employed will be asked to do more? Not a question about it! The market will eventually find its own level; whether it’s $15, less or more is not really material. By and large the one legitimate criticism over the $15 an hour is that the open door to beginning employment (which is what fast food has been for millions of kids) will now be partially closed. If employers have to pay that kind of hourly rate, they’re going to hire older people with more experience, and that’s the reality.

Dear Bruce: I have to pay the IRS $3,000 this year because I was self-employed. I already filed my taxes in April and haven’t heard anything from the IRS. Will they set up a payment plan? — Reader

Dear Reader: I assume that you filed your taxes without sending in the appropriate funds. That was the smart thing to do! You will be receiving a demand for payment soon. If you can afford to pay it all, then that’s the way to go. If not, you should contact the IRS and ask if you can set up a payment plan. The likelihood is that will be allowed.