My wife is interested in transferring her 401K to her IRA retirement; QUESTION is there any cost or penalties for this rollover that way when the time comes there will be one retirement check rather than two...jim s thanks a bunch.
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Should Be O.K.
Jim, this sounds simply like a typical rollover. The gross amount must be REPORTED, but also should be EXEMPTED when the taxable amount is reported. Typically, the distribution code will show "G" on the 1099-R when it is issued.
I'm not addressing any penalties, fees, loads, etc. which might be inherent in the securities and/or trustee arrangements. But there should not be any income tax. -
401k
thank you very much, its just what I thought, i wanted to make sure before we made that decision...jim sComment
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Has she left employment with the employer?
If not she may not (most likely not) be able to move the money out of the plan. Some companies do allow for "in service transfers", but it must be allowed in the plan document and, normally, the employee must have met a specific age requirement (usually 59).Comment
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Jim,
I suppose your wife has Traditional IRA, then she can make a direct trustee-to-trustee transfer without incurring any tax. If she has Roth IRA then she would need to pay tax on the amount being transferred since 401(k) is pretax and Roth IRA is after-tax contributions.
Hope this helps.
kay, NYComment
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