The organization that handles the 401K at my prior employer is the same as my new employer. I withdrew from my 401K back in April for no reason, I didn't need the money. Now I'd like to put it back (and get the taxes I paid back). Is that possible? Please don't answer unless you have some qualifications on this topic. Thanks.
2007-02-08 05:06:46 · 8 answers · asked by Jason M 3 in Business & Finance ➔ Personal Finance
Lizzie's right...you can't avoid the tax and you can't avoid the 10% penalty but you can put it back in through a deduction if you still have the cash. The increased deduction for this year will offset the tax from last year.
Simply raise your deferral percentage to 100%. Then live off of the money that you took out as a distribution. Do that until you either hit $15,500 or you run out of money. The deduction that you get for the money this year will lower your taxes by close to the same amount that you'll be paying on the distribution from last year. If you took more than $15,500 then you'll have to continue the asset payback scheme into next year.
It won't equal out perfectly and you will still get hit with the penalty but it's the best you can do. Make sure you keep enough set aside this year for the 10% penalty and if your tax bracket is higher than 20% the additional tax you'll owe.
Kudos for lizzie for thinking outside the box! It's all perfectly legal albeit a bit unorthodox.
2007-02-08 08:41:58 · answer #1 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
I don't know how much you cashed out, but if it was less than $15,000 you may be able to put it back in (without recouping taxes and penalties paid) just by maximizing your contribution this year. You can put up to 100% of your paycheck into your 401k, up to around $15,000 for the year this year (not sure of the exact amount allowed). So even if you can't afford to contribute that much every year, you can max your contributions for now until to put in the $15,000--and live off of the money you cashed out last year rather than your paycheck.
2007-02-08 06:39:54 · answer #2 · answered by lizzgeorge 4 · 0⤊ 0⤋
Unfortunately you only had a 60 day window to get the funds back into a qualified account.....you're out of luck unless you can find some type of hardship exemption which it doesn't sound like you qualify for.....if it's a substantial amount spend the money to consult with a tax attorney even if it's for no other reason than to give yourself the peace of mind knowing that you exhausted all options to mitigate your mistake.
2007-02-08 05:18:38 · answer #3 · answered by SmittyJ 3 · 1⤊ 0⤋
I highly recommend that you talk to your bank about options. One would think, however, that you could roll it into an IRA, and then use the IRA as collateral for a bank loan. And there is no such thing as an "individual 401k". The whole concept of a 401k is that it's an employer-sponsored savings plan.
2016-03-28 22:17:33 · answer #4 · answered by Janet 4 · 0⤊ 0⤋
In an open forum, anyone can answer and you don't get to choose who.
The person to ask is a tax accountant. I think the answer is no. Just imagine if everyone wanted the taxes they had paid back. I don't think that's likely to happen. Next time, think before you jump.
2007-02-08 05:12:56 · answer #5 · answered by Roberta 4 · 0⤊ 0⤋
Rack it up to experience.
You have 60 days from the time you withdrew it to put it in a tax-free IRA.
You didn't do it. Too late.
You live and you learn.
Next time --> ROLL OVER!!!
2007-02-08 05:50:09 · answer #6 · answered by DaMan 5 · 1⤊ 0⤋
Nope you screwed up man...
that's why there called penalties ...cause u messed up
should of left there till u retired man...
sucks for you...
2007-02-08 05:10:58 · answer #7 · answered by rm4real 3 · 0⤊ 0⤋
geez.. if you dont need the money, i can lend a hand how to use it hehe
2007-02-08 05:09:56 · answer #8 · answered by enelrahs 2 · 0⤊ 1⤋