Question about not rolling over a 401k when leaving your job?
If anyone leaves their job and elects to not rollover their 401k to their new employer and takes the cash do you owe taxes at the time the disbursement is made to you?? I'm just curious if your current employer deducts the taxes and sends you a check for the difference or if it has to be filed with income taxes as regular income and taxes are due at that time?? Any definitive help is greatly appreciated!
Asked By: Elijah - 10/27/2011
Best Answer - Chosen by Asker
If you choose to take a distribution of your 401k proceeds, the employer is required to withhold 20% for taxes. You'll receive a 1099-R during tax season reflecting the distribution and the taxes withheld. You'll "even-up" with Uncle Sam when you file. The distribution is subject to ordinary income taxes plus a 10... More
Answered By: RetirementGuru - 10/27/2011
Additional Answers (4)
your total taxes wil be in the 40-50% range
Answered By: pickmefirstplz - 10/27/2011
As long as you roll it over to another retirement account with a certain timeframe (I don't recall but it might be something like 60 days). It doesn't have to be another employer, it can be a retirement account at a bank (they need to code it as retirement money). As long as the money goes into another retirement... More
Answered By: A - 10/27/2011
As long as you roll it into another retirement account within 60 days (an IRA through your bank, for example) you do not pay taxes on it and you generally don't pay a penalty. If you take the cash, you owe taxes, as well as any early withdrawal penalty your plan has.
Answered By: raina_vissora - 10/27/2011
if you do not roll it over you will be charged taxes and possibly a penalty... More
Answered By: michr - 10/27/2011
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