On Jan 21, 6:48 am, "Phil Marti" <prm20...[at]verizon.net> wrote:

- quote -

Thanks again.

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On Jan 21, 3:25*am, a2mg...[at]yahoo.com wrote:

- quote -

Be sure that when you request the lump-sum payment, tell them it is a
rollover and to not withold any federal, state, etc taxes. If they
withhold 10k and you roll over the remaming 80k to a traditional IRA,
I'm not quite sure what happens.

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<a2mgoog[at]yahoo.com> wrote:

- quote -

Yes. You'll receive a 1099-R from the old plan. See the instructions for
line 16 of the 1040 for what you do.

--
Phil Marti
Clarksburg, MD

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Thanks to everyone for the helpful responses.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Jan 20, 6:13 am, "Phil Marti" <prm20...[at]verizon.net> wrote:
- quote -

Thanks for your response. I think that's what I'll do. I looked
through 575 and 590, and it seems clear that a direct rollover to a
simple IRA means no taxes (this year) on the distribution. I can't
tell, though, whether I am required to file any forms. If everything
is between my ex-employer and my IRA trustee, do I need to file
anything?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

a2mgoog[at]yahoo.com wrote:

- quote -

Roll that money directly to an IRA. The 'zero bracket' in 2008 is $8950,
take advantage of it. (Exemption in 08 = $3500, STD deduction for single
= $5450). The increases to these numbers may very well stay ahead of
your need for cash, which would be great. Worse case, you start to pay
10% on some of the withdrawal.
JOE

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a2mgoog[at]yahoo.com wrote:

(snipped.... for brevity....)
..
- quote -

I'm only going to answer your #1, since it's the only prudent thing to
do, IMHO. (Well, sometimes.) It's a rollover, and while not avoiding
taxes altogether, certainly strings them out over your future life.

As I tell my clients, "Tax postponed means tax saved."
(There's got to be a better way to say that, something pithy that rhymes.)

ChEAr$,
Harlan Lunsford, EA n LA

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

<a2mgoog[at]yahoo.com> wrote:

- quote -

Correct.

- quote -

Not quite. The gross amount would be added to your other income for the
year, and then tax computed as usual. It doesn't all get taxed at your
final marginal rate. There would be a $9,000 penalty on top of the income
tax.

- quote -

Yes.

- quote -

No

- quote -

No. Remember, though, that you must continue the SEPPs for the required
time even though you may not now need the money.

- quote -

The income tax bite would be the same, but you'd avoid the 10% penalty.
There's nothing that requires an all-or-nothing conversion, so you could
convert just a portion each year, pehaps enough to bring you to the top of
the 10% bracket.

Rollovers and lump-sum distributions are discussed in IRS Publications 575
and 590. Roth IRAs are in 590.

--
Phil Marti
Clarksburg, MD

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

If anyone can help me with this, I would appreciate it.

I turn 55 this year, and I become eligible on my birthday to get a
lump sum retirement payment from my former employer. It will be
around $90K. I will take it now because I'm afraid if I wait until
I'm 59, they might change the rules, or stop paying altogether, as
some other companies have done.

I quit working several years ago with about $300K in my (regular)
IRA. With a little luck in the stock market, that's now around $500K,
divided among several accounts. No taxes yet, since it's an IRA. I
have been living on my savings, supplemented by withdrawals from my
IRA. I don't have to pay early withdrawal penalties because I'm
taking "substantially equal" annual amounts from a couple of the
smaller accounts, according to the minimum withdrawal formula in the
IRA pub (basically balance/life expectancy). I haven't had to file a
return because my IRA plus my savings interest comes to less than the
minimum income needed to file (now about $8K per year). Since I am
single, my house is paid off, and I live frugally, I can actually live
quite comfortably on about $10K/year.

Since I didn't owe any tax last year, I gather that there will be no
penalty for not filing estimated taxes if I take the $90K as income
this year. However, I also gather that I will be taxed at the top
rate, plus a penalty for taking the payment before age 59-1/2.

So, my questions:

1. Can I have this payment sent to an existing IRA account and avoid
taxes on it altogether?

2. Is there any way to take the payment as regular income, and income-
average over past or future years to lower my tax rate?

3. If I take this payment as regular income, and pay the 10% penalty
for early distribution, will it also trigger penalties in my existing
IRAs that I have been withdrawing money from?

4. I don't know much about Roth IRAs. Would there be a way to get
this into one without a big tax bite?


Thanks for any help, and especially for references to specific pages
of IRS publications.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >