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Transferring 401k to IRA
Posted on 1/26/17 at 6:23 pm
Posted on 1/26/17 at 6:23 pm
I'm looking into transferring wife wife's 401k from her old job into an IRA to be able to defer taxes to the following year. I was told this was possible. Instead of cashing out the 401k and paying the 10% penalty plus 20% taxes, can I transfer it to an IRA and and just pay the 10% penalty and then defer taxes to the next year? I'm looking to use the cash for a real estate investment and defer the taxes would help me as I need that extra money for the investment.
2
Posted on 1/26/17 at 6:28 pm to pcolatiger28
If you "roll" a 401k into an IRA, it is a non-taxable non-penalized event.
If you then take the money out of the IRA, you will pay a 10% penalty plus income tax.
The 401k and the IRA are "qualified" retirement accounts. As long as the money stays in such, you're good.
If you then take the money out of the IRA, you will pay a 10% penalty plus income tax.
The 401k and the IRA are "qualified" retirement accounts. As long as the money stays in such, you're good.
Posted on 1/28/17 at 8:52 am to pcolatiger28
I believe once you leave a job ,that job's 401k can be rolled all into a rollover IRA, with no penalties and be done at any time.
Further, if you leave your old 401k open for too long, the old company may want to close your account and if you didn't rollover then to a qualifying IRA, they would send you a check with the 10% penalty taken out.
Further, if you leave your old 401k open for too long, the old company may want to close your account and if you didn't rollover then to a qualifying IRA, they would send you a check with the 10% penalty taken out.
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