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My father recently passed away and left my brother and i a small 401k of about $9000 which will be divided between us evenly. I currently live and work in Germany. I earn Euro and not dollar, so my taxable income every year is 0. My Question is what options or rather what would be my best option to do with this money. I was considering a payout.
How much tax would i pay on this amount ($4500.00)
Thank you for using justanswer
I am truly sorry for your loss
I'm reading something for you.........please give me a minute
You have a couple of choices on how to handle the portion of the 401K
First you can take the lump sum and pay taxes on it (even if you are working overseas, this distribution is US sourced, so you would have to fie a 1040.
You also may "roll " this 401K into an IRA, but there are specific rules for this
1-If you choose to roll this over , it must be performed from institution to institution.........you may not touch the money......
The IRA must be titled in the name of the deceased, with the non spouse (you) listed as the beneficiary
When you reach age 70 1/2, you must start taking the required minimum amount, just as you would with any other IRA
I need to leave the forum in a few minutes.....although I was hoping to be able to answer any questions you had before I had to leave
I will be back later today, so if you have questions, please post them here
How much would i be taxed on $4500?
And do i have to wait until im 701/2 to withdraw the money?
Thanks for the answer, The link you provided did not work, so i googled it. If i understand what you saig correctly, I would need to convert my foriegn incom to dollars to determine my Tax Bracket (http://individual.troweprice.com/public/Retail/Planning-&-Research/Tax-Planning/Prepare-Your-Taxes/Tax-Rate-Schedules). Once this is determined, i know how much i would be taxed?!
Is this correct?