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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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i retired 1/1/08 and i will be 60 yrs old in october. i want

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i retired 1/1/08 and i will be 60 yrs old in october. i want to withdraw all money from my 401k at my old employer. they will take out taxes and i don't think i have to pay a 10% penalty. do i have to roll over any or all of my withdrawal?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.

LEV :

Hi and welcome to Just Answer!

LEV :

Because you are over 59 1/2 at the time of distribution - there is no 10% penalty.
However - the distribution from your 401k plan will be added to your taxable income.

LEV :

That is up to you - if you want to use the money or to rollover to the IRA account.
If you rollover part of your distribution - that part will not be taxable.

LEV :

When you take a distribution - the administrator is required to withhold taxes - unless you specifically ask not to withhold.
However - your tax liability will be determined at the tax time - based on your total income, filing status, deductions, etc.

LEV :

I will estimate your possible tax liability if you provide your total taxable income and the amount of expected distribution.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22646
Experience: Taxes, Immigration, Labor Relations
Lev and 8 other Tax Specialists are ready to help you
Customer: replied 2 years ago.
agi was less than $30000 last yr and distribution amt is approx $75000. tax rate is 20% only.
Customer: replied 2 years ago.
state tax is my choice of %. i usually owe Va state taxes of approx $100.00.
Expert:  Lev replied 2 years ago.

Assuming you are single, standard deduction, $30,000 gross income, no other deductions or credits - your estimated income tax liability would be $2600

 

With additional $75000 taxable distribution - your total income will be $105,000 - and expected tax liability - $20,300.

That means - your ADDITIONAL tax liability because of the distribution is estimated as $17,700.

 

Because of large taxable income - you are pushed into a higher tax bracket.

To reduce the tax pressure - I might suggest to spread the distribution over several years.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22646
Experience: Taxes, Immigration, Labor Relations
Lev and 8 other Tax Specialists are ready to help you

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