|
#10
09-05-2005, 03:14 AM
| |||
| |||
 Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 "joeu2004[at]hotmail.com" <joeu2004[at]hotmail.com> wrote: - quote - > A.G. Kalman wrote:
Duh huh? Of course this fact of no stock was given in the> > You also haven't considered employer stock and NUA. > Duh, perhaps because there are no employer stocks to > consider. prior posts, right? -- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062 www.woods-financial.com << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#9
08-29-2005, 02:26 PM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 <joeu2004[at]hotmail.com> wrote: - quote - > > Once you've retired, AFAIK you have no ability to roll
No, that's standard. I should have been clearer.> > funds INTO your 401(k). > It might be plan-specific or it might be part of the special > severance offering, but my employer specifically states: > "you can roll [the pension benefit] over into an IRA, the > [company] 401(k) plan or another employer's plan" When you leave employer A and go to employer B, you can roll A's 401(k) into B's 401(k) if B's plan allows it. IIRC when you leave A you're retiring, not going to a new employer, and the plan you want to roll A's 401(k) into is from prior employment. That is what I think you can't do. The definitive answer will come from the plan you want to roll into since they don't have to take rollovers, regardless of what's allowed by law. -- Phil Marti Clarksburg, MD << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#8
08-28-2005, 09:58 AM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 A.G. Kalman wrote: - quote - > You also haven't considered employer stock and NUA.
Duh, perhaps because there are no employer stocks toconsider. << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#7
08-28-2005, 09:58 AM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 Phil Marti wrote: - quote - > Once you've retired, AFAIK you have no ability to roll
It might be plan-specific or it might be part of the special> funds INTO your 401(k). severance offering, but my employer specifically states: "you can roll [the pension benefit] over into an IRA, the [company] 401(k) plan or another employer's plan" << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#6
08-25-2005, 11:22 AM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 joeu2004[at]hotmail.com wrote: - quote - > David Woods wrote:
If you separate fro employment and meet the age 55> > "joeu2004[at]hotmail.com" <joeu2004[at]hotmail.com> wrote: > > > Two financial consultants were unaware of the alleged > > > difference between IRAs and "qualified plans", which > > > I believe presume includes a 401(k). Right? > > There is nothing "alleged" about it. > The term "alleged" referred to my fallability -- the > potential error of my assertion. But thanks for > confirming its correctness. > > > One financial consultant researched it and concluded > > > that I am correct. But she said it was "plan specific" > > Plan documents have nothing to do with whether an IRS > > penalty applies. > FYI, one document from the (major) financial service > explains it this way: > "Distributions taken before age 59 1/2 from annuities, > Traditional IRAs, Roth IRAs, SEP-IRAs, SIMPLE-IRAs, > Keogh accounts, and employer-sponsored savings accounts > (e.g., 401(k), 401(a), 403(b), and governmental 457(b) > plans) may be subject to a 10% early withdrawal penalty. > Withdrawals from __certain__ employer-sponsored savings > accounts are penalty free when the account owner leaves > the employer in the year they turn age 55 or older. This > age-55 exception does not apply to any type of IRA." > Note the emphasis (mine) on "certain" employer plans. > This might be what the financial consultant was referring > to when she said it was "plan specific". > However, IRS Pub 575 does not seem to make any such > distinction -- unless the financial service explanation > is referring to qualified v. non-qualified plans when it > says "certain". > I notice that the word "qualified" does not appear > anywhere in that explanation, whereas it does appear in > some nearby paragraphs. But I would consider that to be > an odd interpretation since the immediately-preceding > sentence enumerates only qualified employer-sponsored > plans. > Anyway, thanks for your response. I am more confident > of my reading of Pub 575. > My conclusion is: it is better to roll over into a > 401(k) instead of an IRA if: (1) you are between 55 > and 59.5 at termination; and (2) you do not mind the > limited investment opportunities compared to most IRAs. > It gives you the option of withdrawing funds as needed > without incurring the 10% penalty. You can always roll > the 401(k) funds over to an IRA after you turn 59.5. requirement, you don't pay the 10% penalty if you take a distribution before age 59 1/2 from that plan. If you rollover the plan assets to another 401K at an employer where you are working you will incur the 10% penalty if you take a distribution before age 59 1/2 from that plan. You also haven't considered employer stock and NUA. -- Alan http://taxtopics.net << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#5
08-25-2005, 11:03 AM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 <joeu2004[at]hotmail.com> wrote: - quote - > My conclusion is: it is better to roll over into a
I'd love to, but it doesn't make any sense. Once you've> 401(k) instead of an IRA if: (1) you are between 55 > and 59.5 at termination; and (2) you do not mind the > limited investment opportunities compared to most IRAs. > It gives you the option of withdrawing funds as needed > without incurring the 10% penalty. You can always roll > the 401(k) funds over to an IRA after you turn 59.5. > Agreed? retired, AFAIK you have no ability to roll funds INTO your 401(k). I do agree that, if you think you might need some 401(k) money during the 55-59.5 retirement period, it's best to leave it in the 401(k) so you can withdraw without penalty. -- Phil Marti Clarksburg, MD << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#4
08-25-2005, 11:03 AM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 <joeu2004[at]hotmail.com> wrote: - quote - > David Woods wrote:
No. If you roll a 401(k) into another 401(k) (because you've> > "joeu2004[at]hotmail.com" <joeu2004[at]hotmail.com> wrote: > > > Two financial consultants were unaware of the alleged > > > difference between IRAs and "qualified plans", which > > > I believe presume includes a 401(k). Right? > > There is nothing "alleged" about it. > The term "alleged" referred to my fallability -- the > potential error of my assertion. But thanks for > confirming its correctness. > > > One financial consultant researched it and concluded > > > that I am correct. But she said it was "plan specific" > > Plan documents have nothing to do with whether an IRS > > penalty applies. > FYI, one document from the (major) financial service > explains it this way: > "Distributions taken before age 59 1/2 from annuities, > Traditional IRAs, Roth IRAs, SEP-IRAs, SIMPLE-IRAs, > Keogh accounts, and employer-sponsored savings accounts > (e.g., 401(k), 401(a), 403(b), and governmental 457(b) > plans) may be subject to a 10% early withdrawal penalty. > Withdrawals from __certain__ employer-sponsored savings > accounts are penalty free when the account owner leaves > the employer in the year they turn age 55 or older. This > age-55 exception does not apply to any type of IRA." > Note the emphasis (mine) on "certain" employer plans. > This might be what the financial consultant was referring > to when she said it was "plan specific". > However, IRS Pub 575 does not seem to make any such > distinction -- unless the financial service explanation > is referring to qualified v. non-qualified plans when it > says "certain". > I notice that the word "qualified" does not appear > anywhere in that explanation, whereas it does appear in > some nearby paragraphs. But I would consider that to be > an odd interpretation since the immediately-preceding > sentence enumerates only qualified employer-sponsored > plans. > Anyway, thanks for your response. I am more confident > of my reading of Pub 575. > My conclusion is: it is better to roll over into a > 401(k) instead of an IRA if: (1) you are between 55 > and 59.5 at termination; and (2) you do not mind the > limited investment opportunities compared to most IRAs. > It gives you the option of withdrawing funds as needed > without incurring the 10% penalty. You can always roll > the 401(k) funds over to an IRA after you turn 59.5. > Agreed? changed employers), you lose the ability to tap those funds before age 59.5 unless you leave the service of the new employer. Better to leave the funds in the original 40(k) if you think there's a chance you'll tap the funds before 59.5. - quote - > The other touted benefit of a 401(k) is the ability to
There is, or used to be, another benefit for 401(k) plans.> take a loan. I am not interested in that. So if that > were the only benefit, I would roll over to an IRA, > were it not for the implications of the age-55 > exception. Agreed? The assets were better protected from creditors than IRA assets. Recent legislation has strengthened the protection for IRA assets, so this may no longer be a point of distinction. Ira Smilovitz << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#3
08-23-2005, 04:52 AM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 David Woods wrote: - quote - > "joeu2004[at]hotmail.com" <joeu2004[at]hotmail.com> wrote:
The term "alleged" referred to my fallability -- the> > Two financial consultants were unaware of the alleged > > difference between IRAs and "qualified plans", which > > I believe presume includes a 401(k). Right? > There is nothing "alleged" about it. potential error of my assertion. But thanks for confirming its correctness. - quote - > > One financial consultant researched it and concluded
FYI, one document from the (major) financial service> > that I am correct. But she said it was "plan specific" > Plan documents have nothing to do with whether an IRS > penalty applies. explains it this way: "Distributions taken before age 59 1/2 from annuities, Traditional IRAs, Roth IRAs, SEP-IRAs, SIMPLE-IRAs, Keogh accounts, and employer-sponsored savings accounts (e.g., 401(k), 401(a), 403(b), and governmental 457(b) plans) may be subject to a 10% early withdrawal penalty. Withdrawals from __certain__ employer-sponsored savings accounts are penalty free when the account owner leaves the employer in the year they turn age 55 or older. This age-55 exception does not apply to any type of IRA." Note the emphasis (mine) on "certain" employer plans. This might be what the financial consultant was referring to when she said it was "plan specific". However, IRS Pub 575 does not seem to make any such distinction -- unless the financial service explanation is referring to qualified v. non-qualified plans when it says "certain". I notice that the word "qualified" does not appear anywhere in that explanation, whereas it does appear in some nearby paragraphs. But I would consider that to be an odd interpretation since the immediately-preceding sentence enumerates only qualified employer-sponsored plans. Anyway, thanks for your response. I am more confident of my reading of Pub 575. My conclusion is: it is better to roll over into a 401(k) instead of an IRA if: (1) you are between 55 and 59.5 at termination; and (2) you do not mind the limited investment opportunities compared to most IRAs. It gives you the option of withdrawing funds as needed without incurring the 10% penalty. You can always roll the 401(k) funds over to an IRA after you turn 59.5. Agreed? The other touted benefit of a 401(k) is the ability to take a loan. I am not interested in that. So if that were the only benefit, I would roll over to an IRA, were it not for the implications of the age-55 exception. Agreed? << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#2
08-23-2005, 04:52 AM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 and 55.9? James Lewis wrote: - quote - > <joeu2004[at]hotmail.com> wrote:
Not just "after age 54", but "after Jan 1 of the year you> > I think IRS Pub 575 (page 28) says it very clearly: > > the 10% early-withdrawal penalty is not assessed for > > withdrawals between age 55 and 59.5 if your separation > > from service was in or after the year in which you > > turn 55 -- but only from qualified plans other than IRAs. > > > I am referring to potentially uneven withdrawals, not > > "substantially even" 72(t) withdrawals. I am also > > not referring to loans. > > > Two financial consultants were unaware of the alleged > > difference between IRAs and "qualified plans", which > > I believe presume includes a 401(k). Right? > > > One financial consultant researched it and concluded > > that I am correct. But she said it was "plan specific"; > > that is, the 10% early-withdrawal penalty could be > > avoided, she said, only because it was provided for in > > the employer's 401(k) plan. > > > I still believe that IRS Pub 575 says it applies > > generally to all non-IRA qualified plans, whether or > > not the plan specifies it. > > > Does anyone know for sure? Can anyone offer some > > justification for the doubts of the financial people > > I have consulted, given the excerpts from Pub 575 > > below? > > ----- > > > IRS Pub 575 states on page 28: > > > "Most distributions (both periodic and nonperiodic) > > from qualified retirement plans and nonqualified > > annuity contracts made to you before you reach age > > 59 1/2 are subject to an additional tax of 10%." > > > "The tax does not apply to distributions that are: > > > "* From a qualified retirement plan (other than an > > IRA) after your separation from service in or > > after the year you reached age 55." > The key words are "separation from service".....if you leave > an employer after age 54 and take any or all the proceeds > from the plan, there is no 10% penalty. turn 55" << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#1
08-21-2005, 12:48 AM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 "joeu2004[at]hotmail.com" <joeu2004[at]hotmail.com> wrote: - quote - > I think IRS Pub 575 (page 28) says it very clearly:
There is nothing "alleged" about it.> the 10% early-withdrawal penalty is not assessed for > withdrawals between age 55 and 59.5 if your separation > from service was in or after the year in which you > turn 55 -- but only from qualified plans other than IRAs. > I am referring to potentially uneven withdrawals, not > "substantially even" 72(t) withdrawals. I am also > not referring to loans. > Two financial consultants were unaware of the alleged > difference between IRAs and "qualified plans", which > I believe presume includes a 401(k). Right? - quote - > One financial consultant researched it and concluded
Plan documents have nothing to do with whether an IRS> that I am correct. But she said it was "plan specific"; > that is, the 10% early-withdrawal penalty could be > avoided, she said, only because it was provided for in > the employer's 401(k) plan. penalty applies. - quote - > I still believe that IRS Pub 575 says it applies
The pub is correct.> generally to all non-IRA qualified plans, whether or > not the plan specifies it. > Does anyone know for sure? Can anyone offer some > justification for the doubts of the financial people > I have consulted, given the excerpts from Pub 575 > below? > ----- > IRS Pub 575 states on page 28: > "Most distributions (both periodic and nonperiodic) > from qualified retirement plans and nonqualified > annuity contracts made to you before you reach age > 59 1/2 are subject to an additional tax of 10%." > "The tax does not apply to distributions that are: > "* From a qualified retirement plan (other than an > IRA) after your separation from service in or > after the year you reached age 55." -- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062 www.woods-financial.com << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
08-21-2005, 12:48 AM
| |||
| |||
| Re: Avoid 10% penalty for w/d from 401(k), not IRA, between 55 and 55.9? <joeu2004[at]hotmail.com> wrote: - quote - > I think IRS Pub 575 (page 28) says it very clearly:
The key words are "separation from service".....if you leave> the 10% early-withdrawal penalty is not assessed for > withdrawals between age 55 and 59.5 if your separation > from service was in or after the year in which you > turn 55 -- but only from qualified plans other than IRAs. > I am referring to potentially uneven withdrawals, not > "substantially even" 72(t) withdrawals. I am also > not referring to loans. > Two financial consultants were unaware of the alleged > difference between IRAs and "qualified plans", which > I believe presume includes a 401(k). Right? > One financial consultant researched it and concluded > that I am correct. But she said it was "plan specific"; > that is, the 10% early-withdrawal penalty could be > avoided, she said, only because it was provided for in > the employer's 401(k) plan. > I still believe that IRS Pub 575 says it applies > generally to all non-IRA qualified plans, whether or > not the plan specifies it. > Does anyone know for sure? Can anyone offer some > justification for the doubts of the financial people > I have consulted, given the excerpts from Pub 575 > below? > ----- > IRS Pub 575 states on page 28: > "Most distributions (both periodic and nonperiodic) > from qualified retirement plans and nonqualified > annuity contracts made to you before you reach age > 59 1/2 are subject to an additional tax of 10%." > "The tax does not apply to distributions that are: > "* From a qualified retirement plan (other than an > IRA) after your separation from service in or > after the year you reached age 55." an employer after age 54 and take any or all the proceeds from the plan, there is no 10% penalty. Mike Lewis, CPA << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
|
#-1
08-19-2005, 04:00 PM
| |||
| |||
| Avoid 10% penalty for w/d from 401(k), not IRA, between 55 and 55.9? I think IRS Pub 575 (page 28) says it very clearly: the 10% early-withdrawal penalty is not assessed for withdrawals between age 55 and 59.5 if your separation from service was in or after the year in which you turn 55 -- but only from qualified plans other than IRAs. I am referring to potentially uneven withdrawals, not "substantially even" 72(t) withdrawals. I am also not referring to loans. Two financial consultants were unaware of the alleged difference between IRAs and "qualified plans", which I believe presume includes a 401(k). Right? One financial consultant researched it and concluded that I am correct. But she said it was "plan specific"; that is, the 10% early-withdrawal penalty could be avoided, she said, only because it was provided for in the employer's 401(k) plan. I still believe that IRS Pub 575 says it applies generally to all non-IRA qualified plans, whether or not the plan specifies it. Does anyone know for sure? Can anyone offer some justification for the doubts of the financial people I have consulted, given the excerpts from Pub 575 below? ----- IRS Pub 575 states on page 28: "Most distributions (both periodic and nonperiodic) from qualified retirement plans and nonqualified annuity contracts made to you before you reach age 59 1/2 are subject to an additional tax of 10%." "The tax does not apply to distributions that are: "* From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55." << ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== > |
| Tags |
| 10%, 401k, 559, avoid, ira, penalty, w or d |
Similar Threads | ||||
| Thread | Forum | Replies | Last Post | |
| We at Bank of America will do anything to avoid any responsibility for our actions. dkzzzz: I purchased bus tickets through international web site that belongs to largest transportation company in Scandinavia. The Bank of America idiots... | Microsoft Money | 1 | 10-04-2006 01:28 AM | |
| LLC to avoid cap gains on rental sale? Adam Cole: I have a retired friend who's asked me if there's a way to consolidate her multiple real estate holdings into equity in a single property without... | Taxes | 4 | 07-03-2005 04:08 PM | |
| Discounting FMV of ISOs on exercise date to avoid AMT? Jonathan Kamens: Back when my employer went public during the boom, I got killed by AMT because I exercised shortly before the IPO, when the FMV of my options was... | Taxes | 5 | 04-06-2005 03:18 PM | |
| Avoid Estate Tax Scheme Ken: Is it legal to shift taxes from estate taxes to capital gains as follows: - child borrows money from parent at low interest rate - loan to be... | Taxes | 2 | 12-28-2004 08:19 PM | |
| Canadians: Avoid MS Money 2004!! It's crap! Alan: I just wasted $50 on MS Money 2004 Canadian version. It has absolutely no support for RRSPs, yet it claims to be customized for Canadians. DO... | Microsoft Money | 17 | 01-20-2004 04:26 PM | |
| Thread Tools | |
| Display Modes | |
| |
Linear Mode
