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401K
What should I do with 401k after leaving my job? Do I pay taxes on 401k withdrawal after age 62? Are there tax benefits to convert to Roth IRA or Roth 401k in order to enable tax-free withdrawal? Is there a 401k withdrawal calculator for CA ?
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401K
Hi Chalis,
I hope you are having a good day! If you do not need the money from your 401k plan, it would be best to have the funds rolled over to another retirement account and avoid any tax on any withdrawal.
You can convert your 401k to a Roth IRA or a Roth 401k, to allow for tax-free withdrawal, but it will be taxable income in the year your convert from traditional to Roth.
Here is a great resource on converting to a Roth , https://turbotax.intuit.com/tax-tips/investments-and-taxes/now-everyone-can-convert-to-a-roth/L4NEqO...
The CA Franchise Tax Board does have a tax calculator, it currently is 2022, but continue to check their site, https://webapp.ftb.ca.gov/TaxCalc/.
I hope you find this information helpful!
Connie
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401K
Hi Chalis,
I hope you are having a good day! If you do not need the money from your 401k plan, it would be best to have the funds rolled over to another retirement account and avoid any tax on any withdrawal.
You can convert your 401k to a Roth IRA or a Roth 401k, to allow for tax-free withdrawal, but it will be taxable income in the year your convert from traditional to Roth.
Here is a great resource on converting to a Roth , https://turbotax.intuit.com/tax-tips/investments-and-taxes/now-everyone-can-convert-to-a-roth/L4NEqO...
The CA Franchise Tax Board does have a tax calculator, it currently is 2022, but continue to check their site, https://webapp.ftb.ca.gov/TaxCalc/.
I hope you find this information helpful!
Connie
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401K
If you withdraw funds, you will pay income tax, no matter your age. If you are under age 55, you will also pay a 10% penalty for early withdrawal. The amount of tax depends on your total income, deductions, filing status, and other factors. There are various income tax calculators on the web.
You have the option of rolling over the money to an IRA. Having the money in an IRA may give you more investment options, but they may have higher cost (higher expenses). The best way to do a rollover is to set up the IRA, then contact the 401k provider and have them do a direct transfer from A to B, so the money does not go through your hands or bank account.
Once you turn 73, you will be required to withdraw a certain amount each year (you are not allowed to leave the money alone forever, you have to start taking it out and paying taxes). But you are certainly free to withdraw the money sooner if you want or need to spend it.
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