401k transfer during layoff

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Topic Author
jon63
Posts: 5
Joined: Fri Jun 07, 2019 7:01 pm

401k transfer during layoff

Post by jon63 » Wed Mar 25, 2020 7:07 pm

may be on disaster relief layoff soon, presume same rules apply to 401k as regular layoff.
plan on transferring most of balance to ira.

(1) legally how much time does employer (plan administrators) have to do transfer or write check.

(2) how do I keep them from withholding 20% for taxes if they write check.

(3) reason for wanting to transfer, fund fees and administrative fees are high.

(4) will still make contributions to 401k because of match, admin fees will be way lower since I will be starting over.

(5) can I deposit entire balance (invested for 30 years) in my Roth IRA, have already made max contribution for year.

(6) currently in 12% tax bracket, if I can transfer to ROTH presume I will have to pay that plus state tax 3.3% maybe county tax 2%

(7) only reason wanting to do Roth conversion, may inherit funds that require RMDs, pay dividends, and interest. yearly income from these funds could be very high.

Dottie57
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Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: 401k transfer during layoff

Post by Dottie57 » Wed Mar 25, 2020 7:13 pm

If you are indeed able to roll your 401k over, set up the IRA (Roth or traditional) at your chosen brokerage. Have the brokerage pull the funds from your 401k electronically. No fuss, no muss, no 20% withholding.

What exactly is a disaster relief lay-off? Would you return to your job at some time?

cork
Posts: 25
Joined: Thu Aug 01, 2019 12:37 pm

Re: 401k transfer during layoff

Post by cork » Wed Mar 25, 2020 7:19 pm

Though your annual contribution limit isn’t affected by rollovers, if you move money from a pretax retirement account to a Roth IRA, you must include that amount in your taxable income for the year. For example, if you roll over $15,000 from your former employer’s 401(k) to your Roth IRA, you’ll have to pay tax on an additional $15,000 of income.

Topic Author
jon63
Posts: 5
Joined: Fri Jun 07, 2019 7:01 pm

Re: 401k transfer during layoff

Post by jon63 » Wed Mar 25, 2020 7:24 pm

Dottie57 wrote:
Wed Mar 25, 2020 7:13 pm
If you are indeed able to roll your 401k over, set up the IRA (Roth or traditional) at your chosen brokerage. Have the brokerage pull the funds from your 401k electronically. No fuss, no muss, no 20% withholding.

What exactly is a disaster relief lay-off? Would you return to your job at some time?
unemployment payments are much higher than normal, not required to seek employment while receiving

Topic Author
jon63
Posts: 5
Joined: Fri Jun 07, 2019 7:01 pm

Re: 401k transfer during layoff

Post by jon63 » Wed Mar 25, 2020 7:25 pm

cork wrote:
Wed Mar 25, 2020 7:19 pm
Though your annual contribution limit isn’t affected by rollovers, if you move money from a pretax retirement account to a Roth IRA, you must include that amount in your taxable income for the year. For example, if you roll over $15,000 from your former employer’s 401(k) to your Roth IRA, you’ll have to pay tax on an additional $15,000 of income.
presume at 12% tax rate.

Dottie57
Posts: 8214
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: 401k transfer during layoff

Post by Dottie57 » Wed Mar 25, 2020 9:22 pm

jon63 wrote:
Wed Mar 25, 2020 7:25 pm
cork wrote:
Wed Mar 25, 2020 7:19 pm
Though your annual contribution limit isn’t affected by rollovers, if you move money from a pretax retirement account to a Roth IRA, you must include that amount in your taxable income for the year. For example, if you roll over $15,000 from your former employer’s 401(k) to your Roth IRA, you’ll have to pay tax on an additional $15,000 of income.
presume at 12% tax rate.
I believe you have to pay taxes on unemployment too. Factor that in too.

cork
Posts: 25
Joined: Thu Aug 01, 2019 12:37 pm

Re: 401k transfer during layoff

Post by cork » Thu Mar 26, 2020 6:47 am

jon63 wrote:
Wed Mar 25, 2020 7:25 pm
cork wrote:
Wed Mar 25, 2020 7:19 pm
Though your annual contribution limit isn’t affected by rollovers, if you move money from a pretax retirement account to a Roth IRA, you must include that amount in your taxable income for the year. For example, if you roll over $15,000 from your former employer’s 401(k) to your Roth IRA, you’ll have to pay tax on an additional $15,000 of income.
presume at 12% tax rate.
Yes, unless the amount is high enough to put you in a higher tax bracket.

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