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New Member
posted Jun 4, 2019 8:15:21 PM

I HAVE TO PAY TAXES ON THE COST BASIS OF MY 401K STOCK DISTRIBUTION. I AM SINGLE. THE COST BASIS IS $345,791.35. CAN ANYONE TELL ME THE MARGINAL BRACKET AND TAX

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.

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14 Replies
Level 15
Jun 4, 2019 8:15:22 PM

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.

Level 15
Jun 4, 2019 8:15:24 PM

No idea why my answer was demoted, but @LIZZARDS1 seemed to appreciate it.

Level 15
Jun 4, 2019 8:15:25 PM

a trustee-to-trustee transfer is what you want.

contact fidelity or vanguard, give them your situation ; they will make it happen for you.

Level 15
Jun 4, 2019 8:15:26 PM

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 ? 

Level 15
Jun 4, 2019 8:15:28 PM

((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 

Level 15
Jun 4, 2019 8:15:29 PM

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?  

Level 15
Jun 4, 2019 8:15:30 PM

......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.

New Member
Jun 4, 2019 8:15:32 PM

I would be taking out 9345 shares of stock

Level 15
Jun 4, 2019 8:15:33 PM

Is this Publix stock ?

New Member
Jun 4, 2019 8:15:35 PM

Wells fargo....closing non esop plan. 30 day notice

New Member
Jun 4, 2019 8:15:36 PM

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

Level 15
Jun 4, 2019 8:15:37 PM

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.

New Member
Jun 4, 2019 8:15:39 PM

Nua can be tricky in what sense?

Level 15
Jun 4, 2019 8:15:40 PM

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>