Last year I had a job where I was required to invest in a 401k. Now I have about $1400 in it. Is it true that I could receive an additional amount on my refund since I put money in a 401k?
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Depending on your income, you can receive a credit of up to 50% of the amount you invested in a qualified retirement account including a 401(k). The credit applies only to money you contributed (deferred from your salary) and not to money contributed by your employer. Turbotax will include the credit automatically if you are eligible.
Also let me add an unrelated word of advice, since it sounds like you don't work there any more. If you are no longer working for this employer, they may force you to close the 401(k) because is it is so small, and too expensive for them to maintain (the employer is covering the maintenance fees). If they close the account and send you a check, you have two options.
1. Keep the money and pay income tax plus a 10% penalty for early withdrawal (before age 55).
2. Roll over the money to an IRA (at almost any bank or broker), or a retirement account at a different job (if the new account accepts rollovers). You must make the rollover contribution within 60 days, and be sure to tell the new IRA bank that this is a rollover and not a new contribution. You don't get a new tax deduction for the rollover, but you don't pay income tax or a penalty, and the money stays invested for your retirement.
Thank you. The information you gave me was very helpful. If anything, I would most likely just withdrawl it since rollover can cause complications.
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