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socrateaser
socrateaser, Lawyer
Category: Legal
Satisfied Customers: 34149
Experience:  Retired (mostly)
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Thank you! You helped me before. Problem was solved. I am now without a job, starting June 15th. I have a 401K plan with teachers's association, in xx. I am also getting half of my ex husband pension( not really enough) My questions is : Do I qualify to collect until I settle with a new job? Is it more convenient to retire?( I am 66), Retirement will be less than collection monthly for a while. Very difficult situation. Second concern: May I get retirement ( my ex or mine) and collect at the same time? Are they going to deny me collection because of my 401K plan? I appreciate your response, I will have to downsize, and still have debts and credid cards. XXXX XXXX

Submitted: 1 year ago.
Category: Legal
Expert:  socrateaser replied 1 year ago.
My questions is: Do I qualify to collect until I settle with a new job? Is it more convenient to retire?( I am 66), Retirement will be less than collection monthly for a while. Very difficult situation.
A: The teacher's association may have specific rules concerning your ability to collect. However, in general, a participant is entitled, under federal law, to rollover his/her 401(k) to a "rollover IRA" after termination of employment. After rollover, the participant can do whatever he/she wishes with the assets.
Retirement is irrelevant, assuming that you are permitted to rollover the funds. Only your age matters, and if you are age 59 1/2 or older, then you are not subject to any penalty tax should you choose to withdraw some or all of the rollover IRA -- though you would be liable for ordinary income tax on the deferred income. This usually works out to about 40% of the amount withdrawn -- and there is no escape from the taxes -- except that if you were to move to a state without state income tax, then you would avoid any state income tax on the withdrawal. In some cases, this is a viable option, even if you ultimately decide to return to California. Probably not unless you are withdrawing at least $500,000, which could save you $50,000 or more in state taxes.
Second concern: May I get retirement ( my ex or mine) and collect at the same time?
A: Yes. Subject to any specific rules of the teachers association.
Are they going to deny me collection because of my 401K plan?
A: No.
Please let me know if I can clarify or assist you further.
Customer: replied 1 year ago.
Sorry. Still confuse Does it mean I can retire, collect and get some of my 401K money? Not planning to withdraw big amount. I was thinking on an annuity , to get help monthly, until I get a new job situation. Should I contact SS or teachet's plan first? If I wait x retirement it could be convenient moneywise. Thanks!
E
Expert:  socrateaser replied 1 year ago.

Does it mean I can retire, collect and get some of my 401K money? A: Unless there is some restriction from the teacher's association, you can have all your money, once you transfer it to a Rollover IRA. Not planning to withdraw big amount. I was thinking on an annuity , to get help monthly, until I get a new job situation. Should I contact SS or teacher's plan first? A: teachers. Re annuity, if you're planning to remain in xx for the rest of your life, then consider purchasing tax exempt long-term xx General Obligation Bonds. You can probably get 3.5% interest on the retirement money, federal and state tax free, and not have to pay the horribly high cost of an annuity commission (typically 10% of your purchase price). Hope this helps.

socrateaser, Lawyer
Category: Legal
Satisfied Customers: 34149
Experience: Retired (mostly)
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