Last yr I made 230k and at a high tax bracket three months ago I was layed off and now I want to take my 401k and invest in real estate instead of mutual funds. So I dont want to roll over into an IRA. Will I fall into my tax bracket of 2006 or my present tax bracket?
2007-05-20 08:12:20 · 6 answers · asked by Grace 1 in Business & Finance ➔ Taxes ➔ United States
Present bracket. Income is taxed to you at your tax rate in the year you get the income. The only thing you should watch out for is to make sure you don't get a premature distribution in 2007. There is a 10% penalty for a premature distribution.
2007-05-20 08:23:23 · answer #1 · answered by Anonymous · 0⤊ 0⤋
What you made last year has no effect on how a distribution in 2007 is taxed. But, the distribution will be added to your other 2007 income to determine your tax bracket. Plus a 10% penalty if it is an early distribution.
You are not limited to mutual funds inside an IRA. You can invest in real estate inside an IRA, it is not prohibited.
2007-05-20 09:13:48 · answer #2 · answered by ninasgramma 7 · 0⤊ 0⤋
if you want to invest in real estate instead of mutual funds then invest in REITS. You can invest in RE inside an IRA but it's pretty expensive so you'd better be investing a lot of money; more than 100k. You need special trustees (not everyone does it) and it needs annual appraisals that aren't cheap.
To take it outside the 401k you'll be paying taxes on it which is dependent upon your 2007 income PLUS a 10% penalty which will essentially eat up your gains on any real estate for the next few years. Talk to a financial advisor...you need the help.
2007-05-21 04:25:13 · answer #3 · answered by digdowndeepnseattle 6 · 0⤊ 1⤋
If you cash out Prematurely (that's before your 59 1/2) the money will be treated as your income, or added to any income you have on your tax return. In addition you will have to pay an additional 10% penalty on the money you withdraw. Plus your state might tax and penalize you as well. Doing this is usually a horrible idea. Your paying usually 30-50% of the money in taxes and losing the tax deferred status of the funds.
2007-05-20 08:27:20 · answer #4 · answered by tiescore 6 · 0⤊ 0⤋
you already have a problem to start with you cannot have an outstanding loan when you are not working for the same company. the debt becomes taxable the 60 days after separation if you do not pay back the loan
2016-05-22 02:19:35 · answer #5 · answered by ? 3 · 0⤊ 0⤋
If you made that much money last year then i guess you're smart enough to figure it out yourself, am I right ? It's like having a mechanic asking a 12 year old girl what kind of headers he should install on his car .
2007-05-20 08:30:17 · answer #6 · answered by Anonymous · 0⤊ 2⤋