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11-10-2008, 07:32 PM
| | Junior Member | | Join Date: Nov 2008
Posts: 1
| | | Taxable Withdrawal of Savings Plan
I live in Nebraska. I am 48 years old.
I worked for a company from 1985-1989 that had a savings & investment plan. It was a pre-401(k) plan in which my contributions were all after-tax (i.e. I already paid taxes on the savings amounts prior to them going to the plan. I am fully vested in the plan, but I left the company in 1989 and retained the savings plan without rollover.
My after-tax contributions were just over $6000 and the subsequent earnings (company matching and interest over the years) represent another $24000.
I would like to withdraw my $6000 after-tax contributions and either leave the other money alone or rollover into my current employer 401(k).
Is the after-tax contributions subject to any other taxes (fed or state) or a 10% early withdrawl penalty?
Thanks,
Robin |
11-10-2008, 08:05 PM
| | Senior Member | | Join Date: Mar 2006
Posts: 5,018
| | | Withdrawals from tax advantaged plans are generally proportional, you don't get to choose which money you are taking out.
Also, please put the specific code section of the account to see if there is any penalty on the removal.
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11-10-2008, 10:44 PM
| | Member | | Join Date: Feb 2005 Location: Elgin, IL USA
Posts: 960
| | | Only in a Roth IRA do contributions come out first.
With anything else like a traditional IRA or remotely similar qualified tax deferred plan the taxable and untaxable parts are proportional during distribution. So if it is currently worth $30k, your basis is $6k, and you withdrew $6k, you would likely owe tax/penalty on $4800 of it.
Although, there may be some differences between traditional IRA's, qualified retirement plans, pensions, or annuities, if you have a basis (already taxed contribution), that basis is a percentage of each payout, not first out.
My personal experience with something similar is gradually annually converting part of my IRA that had a basis to a Roth IRA, and only part of each and every conversion is untaxed. |
11-11-2008, 08:50 AM
| | Member | | Join Date: Oct 2008 Location: Raleigh, NC
Posts: 104
| | |
Only in a Roth IRA do contributions come out first.
Efflandt,
I haven't done any Roth conversions yet, but plan to in 2010 when the AGI restriction is lifted for that year....but let me ask a followup question.
After conversion to Roth, there really isn't a difference in original contributions and gains, right? Everything is tax free at that point, no matter when it's withdrawn (after 5 year minimum period).
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