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#174215 - 12/17/06 01:17 AM 1/2 his 401k
fedupwithit Offline
recently joined

Registered: 12/17/06
Posts: 15
Loc: Illinois
I received a letter from the ex's employer about my 1/2 of his 401k. It will be distributed after 60days. Do I get the full amount? Will it be taxed? I have plans for this money. I want to roll it into an IRA. My employer said I can't roll it into my 401k. So an IRA is the next best thing.

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#174216 - 12/17/06 04:28 AM Re: 1/2 his 401k [Re: fedupwithit]
rocketgirl Offline
Carpal \'Tunnel

Registered: 06/24/04
Posts: 8562
Loc: On the beach in 14 years...
It won't be taxed unless you put it in a Roth IRA... but it will be taxed as normal IRA money when you withdraw it when you retire.

A 401k is a plan for employees of a company, not for general funds to be put into.

Personally? I'd invest in a Roth, pay the taxes now and anything you make from here on out will be tax free when you withdraw it, except the interest the money makes, of course. You will have to eventually pay taxes on that portion.
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Lisa Diplomacy - the art of telling someone to go to hell, and them looking forward to the trip.

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#174217 - 12/18/06 03:51 AM Re: 1/2 his 401k [Re: rocketgirl]
spinnerdegrassi Offline
Carpal \'Tunnel

Registered: 08/20/06
Posts: 8221
Eh? Most likely you'd roll it into a straight IRA, to avoid taking any disbursement and paying tax on it now. Roth's are limited to only 4k a year currently. As for Roth's, you pay no tax on whatever is put in period, as long as you wait till 59.5. All gains are also tax free upon withdrawl (hence the low annual cap or everyone would dump all their money in them)

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#174218 - 12/18/06 05:31 AM Re: 1/2 his 401k [Re: spinnerdegrassi]
rocketgirl Offline
Carpal \'Tunnel

Registered: 06/24/04
Posts: 8562
Loc: On the beach in 14 years...
You are correct... sorry for posting the wrong info!
_________________________
Lisa Diplomacy - the art of telling someone to go to hell, and them looking forward to the trip.

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