After 20 years at the same company my job was terminated due to an injury (long story) I got a letter from the company asking for information about my divorce (proof) and the letter said they are going to send me the money in a check.
What should I do to avoid being taxed? Can I put that check in another 401K or ???
I am very confused!!!
Thanks for any help,
Marie
2007-02-11 06:08:59 · 7 answers · asked by Joe B 1 in Business & Finance ➔ Personal Finance
Roll it over to a Roth IRA so you can control the investments
2007-02-11 10:54:34 · answer #1 · answered by Jen G 5 · 0⤊ 0⤋
If the balance in your 401k is greater than $5,000 they will need your approval before sending you a check.
Take the following steps
1. Go to the Fidelity or Vanguard website and open up a IRA account.
2. Call your old company and have them mail the check to the holder of your IRA. Have the check made out to "Fidelity for the Benefit of Marie (your last name her)". Have your old company lists your IRA account number on the check.
DO NOT have the check made out in your name. Having the check made out in your name will create a tax mess.
If you're confused about what to do you can call the Fidelity or Vanguard 800 number for specific instructions.
I'm suggesting Fidelity and Vanguard because they both have a good reputation and have low fees.
2007-02-11 15:22:39 · answer #2 · answered by steven 3 · 0⤊ 0⤋
You can roll the 401k over into an Individual Retirement Account. You can set up an IRA with any bank or investment company. My recommendation is to go with Vanguard, because they charge the lowest fees for the service. www.vanguard.com
There is an IRS time limit between when you get the check and when you set up the replacement IRA - so as soon as you get the check, set up the IRA immediately. If you don't set up the IRA within that time limit, the 401k distribution become taxable. So don't delay
2007-02-11 14:19:13 · answer #3 · answered by Anonymous · 0⤊ 0⤋
I worked for Vanguard for 7 years follow Steven advice do not let them mail you a check made out to you if for any reason they do you need to get it into another 401k or IRA within 60 days.
2007-02-12 08:14:49 · answer #4 · answered by Sandra D 3 · 0⤊ 0⤋
You can roll the 401k money over into another 401k or an IRA to avoid taxation.
2007-02-11 14:13:48 · answer #5 · answered by DLeibowitz 5 · 0⤊ 0⤋
Roll Over IRA.
2007-02-11 14:16:29 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Read "Steven's" answer in these replies- he has the correct approach.
2007-02-12 02:02:50 · answer #7 · answered by Brick 5 · 0⤊ 0⤋