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????Rolling over a 401K ?????********

Discussion in 'Uncategorized Threads' started by cubancigar2000, Nov 11, 2008.

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  1. cubancigar2000

    cubancigar2000 Well-Known Member

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    You cant get it until you are 59. You will never get it without paying tax
     
  2. Barrelbulge(Fl)

    Barrelbulge(Fl) Banned User Banned TS Supporters

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    Cigar, I beleive it is 59 1/2 with no penalty. Bulge
     
  3. Shooting Jack

    Shooting Jack Active Member

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    My brother just pulled his 401 money at age 55 and somehow only had to pay 10 pct penalty. At 1/2 mil that was still fifty thousand but he was concerned that he would loose a lot more than that with the govt meddling. He bought property with the money as an investment. Jackie B.
     
  4. Laudygirl

    Laudygirl TS Member

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    Ever hear the saying "buy low sell high"? If this is long term money, wait!

    To avoid the 20% withholding, you must arrange for a "direct" rollover (also known as a "trustee to trustee" rollover). Put simply, this means the distribution check from the retirement plan at your old company must be made out in the name of the trustee or custodian of the IRA account that you want to receive the rolled-over funds.

    There are companies that have CD annuities, watch close, thay have large fees involved.

    If you take the distribution as cash and are not 59 1/2 there is also a 10% penalty. You may also owe more in taxes as this could bump up your tax bracket and if you live in a state with income tax you will also owe the state tax.
     
  5. cubancigar2000

    cubancigar2000 Well-Known Member

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    Been there done it Buldge, 59 1/2 and no penalty is correct, still taxed though. I took mine out in May when I retired at the age of 65 1/2
     
  6. Barrelbulge(Fl)

    Barrelbulge(Fl) Banned User Banned TS Supporters

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    I started drawing mine at 59 and 8 months. It took a couple of months for the company dummies to figure it out.
     
  7. Barrelbulge(Fl)

    Barrelbulge(Fl) Banned User Banned TS Supporters

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    P3at, that is exactly what I did as I left work on a disability. Had the check made out to" For the benefit of (my name)" and started an IRA. Mike
     
  8. dmarbell

    dmarbell Active Member

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    Start with IRS Publication 590 above. You can do two things with a 401k plan to get it into your own IRA: direct transfer and rollover. Direct transfer goes from trustee to trustee, and you never see the money. No taxes or penalties, and no withholding required. Rollover is when you get the money, and then you have 60 days (not 90) to roll the money over into your IRA. Again, no penalties and no taxes. However, in some cases the people holding your money now will require withholding, because they don't know what you're going to do with the money. If they withhold 20%, you have to match the 20% within 60 days to avoid having the 20% not rolled over be taxed. If you only roll over the 80%, in other words, the 20% is taxed and could be subject to the under-age-59.5 10% penalty.

    You normally have to be separated from service (not working anymore) with the company who holds your 401k to be able to do anything with it, except direct the investments. There are exceptions, including loans against the account, and in some cases, no-hardship in-service rollovers of your vested benefits. These exceptions depend on how your plan is written.

    If you have a taxable IRA, all the distributions will be taxable. Distributions made before you are 59.5 are subject to a 10% penalty. There are exceptions, such as disability, death, first time homebuyers, etc. Look at the publication.

    There is another exception to the under 59.5 penalty, which is called 72t (after IRS Code Section 72(t)). You can start systematic distributions from your IRA or other eligible qualified plan, based on your life expectancy and specific published rates of returns, which will be taxable but not subject to the 10% penalty, regardless of your age. These payments, once started, have to continue until the later of five years from when they start or to age 59.5.

    There are so many plans out there, nobody can give any general advice and be right all the time. There are 401k, 403b, Keogh, profit sharing, defined benefit, Roth accounts, fully taxable IRA, and partially after-tax IRA accounts out there.

    A good book to start with is "The Retirement Savings Time Bomb... And How to Diffuse It" by Ed Slott. He is "America's IRA Expert," it says so right on the book cover (of course, he also wrote the book cover!).

    But for heaven's sake, if you have a significant balance in any of these accounts, get some good, sound advice from a skilled professional before you do anything. Get your advice on 7.5s vs. 8s here, but get financial advice from financial professionals.

    Danny
     
  9. dmarbell

    dmarbell Active Member

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    By the way, my post above is not meant to serve as financial advice of any sort, so you can't rely on it for anything. Consult your own competent financial and/or tax professional.

    Danny
     
  10. pendennis

    pendennis Well-Known Member

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    Call Fidelity, or some other investment fund. I rolled over my 401k into an IRA after I retired. It was all reported to IRS on 1099's, and no tax consequences.

    Best,
    Dennis
     
  11. BigM-Perazzi

    BigM-Perazzi Well-Known Member

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    Generally good advice... your screwed if your not 59 1/2 and employed with the same employer.
     
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