If I withdraw money from my 401K and place it in a money market account, will I have to pay taxes on the sum?

Question

I am 60 years old and I want to put my savings a safe place. I want to suppliment my retirement income with the interest from a money market account. The problem is: will I be taxed on the lump sum that I transfer from a 401k to a money market account?

Answer 1

If you open an IRA Rollover account with a money market feature (available just about anywhere: bank/brokerages) and move it you will NOT be taxed.

Here is the process:

Go to your bank or brokerage and open an account, making sure it has a money market feature.

Call the administrator of your 401(k) (the company that sends you the statements) and tell them you want to rollover your 401k to another institution. They may send you paperwork to complete or they may take your instructions over the phone. Be prepared to have them send the check directly to you bank/broker.
They know how to do this and make distributions all the time. Make sure the check is made payable to the institution such as:
Pay to the order of:
Charles Schwab & Co. IRA
FBO your name here
Account # here

Answer 2

No, if both are set up properly, the money market account as an IRA and if you take the money and put it in within 60 days. But it is much cleaner if you do a rollover directly between the financial institutions so it is never out of their control. If you are putting it in an open money market account where you have ready access to the money, then yes you will be taxed - perhaps with withholding then, certainly at taxtime. Big enough and you may have to pay estimated.

Answer 3

If you withdraw it 'conventionally' and put it into a money market fund, yes, you will have to pay taxes. What you need to do is set up a separate money market account under an IRA agreement, and then have the money transferred directly from your current investment vehicles to the money market fund. The government doesn't care which sort of investment vehicle you use, as long as you don't touch the money for personal use. Speak to a personal banker for more information on getting this done.

Answer 4

I were getting funds, yet this twelve months I easily have misplaced about 10% because of the inventory marketplace tanking. yet my investments in my 401K are extremely agressive. i do not consider the remark below - for sure tax lower price charges is a widespread component of making an investment in a 401K, inspite of the indisputable fact that the purpose is to make funds! that's only a remember of ways risky or conservative you want (or want) to be. For me, i'm nevertheless rather youthful and that i think the acceptable possibility for me to take care of to pay for when I retire is to take some possibility. As i'm getting older i will substitute my investments to extra conservative ones.

Answer 5

401k Money Market

Answer 6

Best to speak with your financial adviser where you have your 401K and tell them your plans. They will give you all the information you need.

Answer 7

hi. I want to rollover my 401k in to Israel marks can I do this? . thanks