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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12044
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My company was recently sold and I am unable to contribute

Customer Question

my company was recently sold and I am unable to contribute to my pre-tax 401K with the new company until next year. This leaves 3 full months of additional income that I will be taxed on. Is there anything I can do to move this money pretax to another place?
Submitted: 10 months ago.
Category: Tax
Expert:  Lane replied 10 months ago.

Hi. I can help you here ... My name's Lane.

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You can certainly roll the money to a traditional IRA, if the old plan allows it.

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You can see that from this IRS rollover chart: https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

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I can help you nwith the forms, if you like.

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And on contributing to something pre-tax, you MAY be able to deduct 5500 (6500 for someone over age 50) to an IRA on a pre-tax basis.

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But because you have been covered (contributed to, or had money contributed for you, into a workplace plan this year) there is an income limitation that may limit the deductibility of a traditional IRA

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For a single filer or head of household filer if income is $61,000 or less you still get a full deduction - more than $61,000 but less than $71,000 there is a partial deduction and above 71,000 the contribution to an IRA is not deductible.

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For joint filers if income is less than $98,000 or less the contribution is full deductible, more than $98,000 but less than $118,000 you get a partial deduction, and $118,000 or more the contribution is not deductible.

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But again, yes you can ALWAYs roll the existing dollars in the old plan (do a trustee to trustee transfer) to an IRA AND (if the new plan allows it (most do) roll the dollars into the new plan.

Expert:  Lane replied 10 months ago.

Please let me know if you have any questions at all, before rating me

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit") ... Otherwise I receive no crediting for the work here.

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Thank you!

Lane

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.