MY NON ESOP PLAN IS BEING CLOSED. IT IS A 401K. I HAVE A COST BASIS FOR STOCK DISTRIBUTION OF $345,791.00. I AM NOT SURE OF MY MY MARGINAL TAX BRACKET. WHAT IS MY TAX APPROXIMATELY WITH ONLY A STANDARD DEDUCTION.
you have to roll the money into another tax-deferred account. You have a 60-day window to make this happen, or , preferably, have the custodian do it for you. Find an advisor immediately if you don't know how to do this. The 401k administrator should be able to assist you.
No idea why my answer was demoted, but @LIZZARDS1 seemed to appreciate it.
a trustee-to-trustee transfer is what you want.
contact fidelity or vanguard, give them your situation ; they will make it happen for you.
Agreed ... roll it over ... otherwise you will be paying up to 35% in just federal taxes alone ... who would want to voluntarily give up a third ?
((Edited out probably inappropriate info as the situation became clearer)
Ahhh taking actual stock out from your 401k in your own company. Net unrealized appreciation issues (NUA)
Maybe you should read :
https://www.fidelity.com/viewpoints/personal-finance/company-stock
I just reread his question. Yes he said he is paying tax on the cost basis. So according to his question he knows he has to pay the tax on the full distribution (including basis).
@LIZZARDS1 are you taking out the actual shares or cash?
......I didn't think it was clear to him/her.
Yeah, the initial "I HAVE TO PAY TAXES ON THE COST BASIS " part might indicate that, or could indicate he was offended...but...he kept pointing to the cost basis $$ amount...as-if it was meaningful, and as-if he was getting taxed on it and thought he shouldn't be.
But that's a common problem with many posts...they are are rarely entirely clear as to what is going thru the poster's mind.
I can roll it over or do partial ....question is whether taking Nua stock will be better than rooling all of it into an Ira and progecting a higher return compounded ...i would sell stock in the ira don’t know when the crossover would be
NUA can be tricky ....talk to a financial advisor that has income tax knowledge before doing anything. Too many variables to give an answer on this forum.
Depending on your situation with the employer stock and their requirements upon the distribution, your age and your total income tax situation there are too many variables to take into consideration ( roll it all if you can, roll some, sell some, this year, next year). I had a client that didn't take the advice given and ended up paying 3 times the taxes he should have if he had stuck to the plan. Seek professional help to plan how to pay the least in taxes possible.
<a rel="nofollow" target="_blank" href="https://www.kitces.com/blog/net-unrealized-appreciation-irs-rules-nua-from-401k-and-esop-plans/">https://www.kitces.com/blog/net-unrealized-appreciation-irs-rules-nua-from-401k-and-esop-plans/</a>