401K In-Service Withdrawal Into An IRA Rollover?

Question

In 2006, I took a pre-approved In-Service withdrawal from my 401K in the amount of $28,000 and it was directly deposited into a Rollover IRA within 2 days. This allowed me greater flexibility with investment choices. What, if any, are the tax consequences? (Yes, I am asking after the fact!) Thank you in advance!

Answer 1

As long as you did not get your hands on the disbursement in any way, there are no tax consequences. It sounds like the rollover was done properly so you can sleep easily.

Answer 2

totally depends on what the reason for your distribution was. Sounds like your plan allows for in-service withdrawals after age 59 1/2. If that's the case then you're good to go so long as the entire balance was rolled over.

However, if you took a hardship to get at the funds to get more flexibility...that wasn't eligible to be rolled over. Then you're looking at an ineligible rollover, 10% extra tax and taxable event. Not likely the latter but some people do some crazy things.

Answer 3

i ought to take a lengthy time period and visit with my banker in the previous I did any procuring spree. My first instinct is to signify you roll the pre-tax money right into a customary IRA, and perchance see about putting the $5k right into a Roth... yet you'll go with to be fairly particular there should not be an early withdrawal penalty on it. it is only too a lot of your properly-deserved money to grant away!!! also, be particular that no area of the distribution you're rolling over is going to you. That way, there is not any doubt as to its being categorised as a rollover. some economic establishments do not code those the right way, each and every from time to time, so be particular it is marked obviously as a rollover, and performance various of copies with the intention to have a paper path in case it is needed later.