If I take half of my 401k and invest it in an IRA what would my tax be for the remaining funds even if I directly invest them into another investment firm?
2007-05-02 04:28:19 · 7 answers · asked by srmc_007 2 in Business & Finance ➔ Taxes ➔ United States
401k to traditional IRA is not taxable 401k to Roth IRA is taxable.
Direct rollovers are best. If you do an indirect rollover (you take money out then deposit to IRA yourself, you're okay as long as you roll over ALL of the distribution. Many times people do an indirect rollover and there is withholding taken out. If you don't roll over an amount equal to the withholding, you will pay a penalty on that part of the distribution
2007-05-02 10:11:19 · answer #1 · answered by Mark S 5 · 0⤊ 0⤋
Money taken from a 401K and put into a rollover traditional IRA either directly or within the required time has no tax consequenses, although you might have to report it. If you roll the money into a Roth IRA, you'd pay the income taxes at whatever rate you pay that year.
If you take money from your 401K and don't roll it into a qualified plan, like an IRA or another employer's 401K, then you owe income taxes as ordinary income for the year you withdrew it. If you're under 59-1/2, you also pay a 10% penalty on the amount not rolled into another qualified plan. Directly investing them into another investment firm unless it's a qualified retirement plan does not save you from paying the taxes.
2007-05-02 05:33:52 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
You would pay not taxes if you transferred money from a 401k to a REGULAR IRA since in both cases, that money is basically pre-tax.
If you transfer the money to a Roth-IRA, you'd have to pay taxes on the money, since Roth-IRA contributions are after-tax.
If you withdraw any of that money to invest in any non-tax deferred account, you'll pay a 10% penalty and income taxes.
It's fine to transfer to an REGULAR IRA if you want more choices in where to invest. You're 401k, though, might already have a good mix of diversified investment choices, though, and you can likely leave there as long as you want.
2007-05-02 04:50:45 · answer #3 · answered by Anonymous · 1⤊ 0⤋
Rollovers from one type retirement account to another directly don't even register. You can remove from one account and deposit in another yourself but have to do so within specified time limit; used to be 60 days; and fill out the paperwork. A direct rollover is best to keep paperwork headache to a minimum.
2007-05-02 05:05:15 · answer #4 · answered by acmeraven 7 · 0⤊ 0⤋
They would never do this. After Social Security runs out that is going to be what they tap next, just wait and see. If they let you get to it now they know there won't be any for them 15 to 20 years from now and trust me they are banking on that money. All of you people who think that money is going to sit untouched are suckers.
2016-05-18 22:26:13 · answer #5 · answered by sue 3 · 0⤊ 0⤋
401K to 401K is not taxed
401K to Roth/traditional IRA is taxed at the full value of whatever you transfer. Because you pay taxes when you put money into those IRA's you'd be responsible to pay any of the taxes on the full amount transferred.
Not sure what you're using it for, but the IRS allows a first time home owner to use up to (not sure of amount but I think it's $10K) for downpayment on a house without penalty.
2007-05-02 04:35:14 · answer #6 · answered by Anonymous · 0⤊ 4⤋
theres no pentaly as long as it goes into another tax deffered instution
2007-05-02 04:34:09 · answer #7 · answered by Anonymous · 0⤊ 0⤋