tax on pension pay-out (line 57, 1040)?

#4 03-06-2004, 07:33 AM

"Arthur L. Rubin" <ronnirubin[at]sprintmail.com> wrote:

- quote -

> I'm a little puzzled. By "pension" do you mean "401(k)" (or
> "403(b)", "457")?
> If so, you had the option to roll it into an IRA within 60
> days of distribution -- or pay the penalty tax.
> If not, you DO NOT have the option to roll it into an IRA,
> or to pay the penalty tax.
> Or am I missing a third alternative?

Yes, it's have enough birthdays, 59.5, no penalty, just pay
the tax.

BC

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#3 03-05-2004, 07:54 PM

Scott Thomas wrote:

- quote -

> I received a lump-sum payout from my previous employer's
> pension fund when I was laid off, and was _not_ given an
> option to roll-over this amount since it was under their
> minimum. Is the "penalty tax" still applicable, in such a
> case? (I'm betting it is, but I wanted to ask to be sure.)
> As a curiousity question - had I taken that pay-out and used
> it to start another IRA (or otherwise contributed the total
> amount to a qualifying plan), would I still be subject to
> that same tax?

I seriously doubt that the company said you could not roll
it over. What they probably said was that they would not
transfer the amount to another plan or IRA directly (trustee
to trustee transfer). You would have 60 days to rollover
the gross proceeds to avoid being taxed on the amount and to
avoid any applicable early withdrawal penalty.

--
Alan
http://taxtopics.net

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#2 03-05-2004, 07:35 PM

Scott Thomas wrote:

- quote -

> I received a lump-sum payout from my previous employer's
> pension fund when I was laid off, and was _not_ given an
> option to roll-over this amount since it was under their
> minimum.

I'm a little puzzled. By "pension" do you mean "401(k)" (or
"403(b)", "457")?

If so, you had the option to roll it into an IRA within 60
days of distribution -- or pay the penalty tax.

If not, you DO NOT have the option to roll it into an IRA,
or to pay the penalty tax.

Or am I missing a third alternative?

<< -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << ------------------------------------------------->

#1 03-05-2004, 07:16 PM

Scott Thomas wrote:

- quote -

> I received a lump-sum payout from my previous employer's
> pension fund when I was laid off, and was _not_ given an
> option to roll-over this amount since it was under their
> minimum. Is the "penalty tax" still applicable, in such a
> case? (I'm betting it is, but I wanted to ask to be sure.)
> As a curiousity question - had I taken that pay-out and used
> it to start another IRA (or otherwise contributed the total
> amount to a qualifying plan), would I still be subject to
> that same tax?

If you manually rolled it over within the 60 day time limit,
there will be no excise tax on line 57 to list.

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03-05-2004, 06:56 PM

Scott Thomas wrote:

- quote -

> I received a lump-sum payout from my previous employer's
> pension fund when I was laid off, and was _not_ given an
> option to roll-over this amount since it was under their
> minimum.

Maybe they would not have assisted in the rollover, but you
could have done so within the sixty days of receipt of the
check.

- quote -

> Is the "penalty tax" still applicable, in such a case?

Assuming 60 days is up, yes.

- quote -

> (I'm betting it is, but I wanted to ask to be sure.)
> As a curiousity question - had I taken that pay-out and used
> it to start another IRA (or otherwise contributed the total
> amount to a qualifying plan), would I still be subject to
> that same tax?

No.

CheeR$,
Harlan Lunsford, EA n LA

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#-1 03-04-2004, 01:33 AM

I received a lump-sum payout from my previous employer's
pension fund when I was laid off, and was _not_ given an
option to roll-over this amount since it was under their
minimum. Is the "penalty tax" still applicable, in such a
case? (I'm betting it is, but I wanted to ask to be sure.)
As a curiousity question - had I taken that pay-out and used
it to start another IRA (or otherwise contributed the total
amount to a qualifying plan), would I still be subject to
that same tax?

--
Scott Thomas, thomass[at]cs.rose-hulman.edu
http://www.cs.rose-hulman.edu/~thomass/

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