Rolling over 401ks to an IRA

Forum|Forum|7 years ago
June 6, 2019
7 replies
57 views

I am looking to get access to some of my 401k dollars as I may want to take a partial early withdrawal. I was advised I could roll over to an IRA and then take what I need as a withdrawal from the IRA. What are the penalties associated with this and what are the other options? (Note: I am currently in talks for a new position but currently unemployed so a rollover to an employer 401k and then a loan is not an option at this time.)

Best answer by macuser_22

There are no taxes or penalties on a rollover to a Traditional IRA. You should have the 401(k) administrator make a trustee-to-trustee rollover to avoid mandatory 20% tax withholding on a 401(k) distribution. You would receive a 1099-R for the year that the rollover took place with a code "G" in box 7 if it is a trustee-to-trustee rollover.

Any distribution from the Traditional IRA would be taxed as ordinary income and subject to a 10% early distribution penalty if under age 59 1/2.

macuser_22

Answer

Alumni - Champ

Any distribution from the Traditional IRA would be taxed as ordinary income and subject to a 10% early distribution penalty if under age 59 1/2.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

egirlAuthor

Level 2

Thank you. Noted about how to not have the 20% withheld. I am looking to understand what penalties there are when I withdraw said rolled over money from that IRA.