Post by bunnymendelbaum on Jul 1, 2013 13:12:54 GMT -5
Ok, I called my old neighbor who did our taxes years ago, but maybe someone here will know.
I took a lump sum distribution from my 401k to roll it over to a IRA because I no longer work at that company. I'm ready to roll it over at my local bank, but we can't figure out the tax stuff. ING (the original 401k company) withheld the taxes and sent them to the feds and state when I did the distribution. So my distribution was the amount minus the taxes. So now I have 60 days to open the IRA wit the full pre-tax amount. (not a problem)
My question is what happens to that tax money sent to the feds and state? Will I see that as a credit on my taxes this year? No one seems to be able to tell me.
Post by bunnymendelbaum on Jul 1, 2013 13:31:19 GMT -5
But I won't lose that money right? It will be in the form of a tax credit.
idk why, but this stuff is like Greek to me. I think I understand it when it was originally explained, but ask me later and I have no idea.
eta: the only reason I am worried is both ING and my local bank kept saying "you need to talk to your tax advisor..." Like I might do something wrong. At this point, I don't think I can do anything "wrong" if I just open an IRA with the full pre-tax amount, but I'm wondering about the taxes.
Post by bunnymendelbaum on Jul 1, 2013 14:43:08 GMT -5
Thanks everyone. Merida - that sounds right. They withheld the 20%, so I have to make that up in a new IRA. ING said I have to do a traditional, but I wish I could do a Roth.
But you are right, how do I prove I rolled it over? Maybe the new bank gives me paperwork. I know that whenever I do my taxes on turbotax it always asks if I've rolled over a 401k, so I'm hoping it will take care of it. I need to remember to pay close attention at tax time.
I guess in retrospect I should have done the trustee-to-trustee transfer. Ugh.
I would talk to a tax advisor because I'm surprised you 'have' to put it into a traditional IRA. I would think you could put it in a Roth and also open a traditional for future contributions.
Post by bunnymendelbaum on Jul 1, 2013 15:45:57 GMT -5
Talked to my tax advisor. He said ING will send me the 1099-R. Then I'll fill out another tax form saying I funded the IRA and I'll get the tax credits.
He said I should do the traditional IRA because the Roth would have to be taxed.