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-> Household Management
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amother
Ginger
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 Mon, Aug 14 2017, 8:30 am
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I need to take some money from my 401k. In the past they always deduct 20% immediately and the withdrawal is considered income. Is there a way for me to take this money out in a legal way and defer the taxes? Thank you.
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doctorima
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Mon, Aug 14 2017, 12:32 pm
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I don't think so. You can double-check with your accountant, but if you're below the withdrawal age (62?) the only way to avoid it being taxable (with a 10% penalty I believe) is if you're rolling it over into another legitimate retirement account (or possibly buying real estate with it within a directed IRA?).
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suzyq
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Fri, Aug 18 2017, 11:57 am
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Depending on your plan, you can take out a loan and pay it back. This money is not taxed now, but you do pay it back with after-tax dollars. Other than that, unless the money in your 401k is Roth money and therefore you have already paid taxes on it, there is no way to avoid being taxed now.
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amother
Ginger
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Fri, Aug 18 2017, 12:07 pm
| suzyq wrote: | | Depending on your plan, you can take out a loan and pay it back. This money is not taxed now, but you do pay it back with after-tax dollars. Other than that, unless the money in your 401k is Roth money and therefore you have already paid taxes on it, there is no way to avoid being taxed now. |
Thank you. One more question if I can. I am trying to help my daughter buy a house. I would like to give her the funds in the 401k. Can I transfer the entire fund into her name so that I'm technically not withdrawing anything and then when my daughter withdraws the money she will deal with the taxes? I realize I should speak to an accountant but I'm trying to get a head up before I do. For the record, I am 70.
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suzyq
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Fri, Aug 18 2017, 12:32 pm
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First of all, if you are 70, there should be no penalty for withdrawing money from your 401(k). As far as I know, you can not transfer the money to your daughter before the taxes are paid while you are still living. (But maybe an accountant would know a loophole that I am not aware of - I do not work as a financial planner, I just consult with companies on retirement plans.)
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