401k distributions
I just turned 55 and will terminate my personal business this month in which I had set up a solo 401k. I understand I need to distribute assets from my account (to myself) within 12 months of termination. Question-Can I take a partial distribution in 2017 and another in 2018 (by April 2018) to help minimize my tax bracket? Thanks-D
Permalink Submitted by Alan - IRA critic on Tue, 2017-04-04 17:00
It appears that you may think that the required distribution must be taxable. Distribution includes a direct rollover, indirect rollover or a taxable distribution. A direct rollover is the usual method used since a direct rollover will not be taxable and there would be no mandatory withholding. If you need some money you can do a direct rollover of a portion of the balance and take a taxable distribution of the rest of the balance (20% withholding) for covering your expenses for a time. You can also split the distributions between 2017 and early 2018 if you choose to. Finally, remember that you must file a 5500 EZ reporting the plan termination even if your balance is under 250k.
Permalink Submitted by Darrel Geffers on Tue, 2017-04-04 17:21
Correct Thanks-This would be for taxable distributions so it appears I could split the amounts between 2 years (17/18) as long as it’s all done within the 12 months of plan termination correct? It’s a large sum so the remaining would go into an IRA.
Permalink Submitted by Alan - IRA critic on Tue, 2017-04-04 17:39
Yes, that is correct.
Permalink Submitted by Debbie Gorencic on Wed, 2017-04-05 00:00
I am 62 and have a 401K with a nursing agency Care Unlimited which I have not worked for in over 5 years. I wanted to take some money out of the account and I called the company that manages the account they told me that they are unable to do any transactions and I need to call their benefits department. I called the company and was told that the company was bought out by PSA and accounts were closed in December 2016 and money can’t be removed from my account. Is there any way I can transfer my money to Vangard IRA? Vanguard set up a money market account for the money. Thanks!
Permalink Submitted by Alan - IRA critic on Wed, 2017-04-05 00:35
Googling this acquisition of Care Unlimited by PSA does not turn up any legal problems. Under Sec 401(a)-31 a separated employee who asks for a distribution or direct rollover must be accomodated. However, it is possible that if your balance was under 5,000 the plan could have notified you that you had to provide IRA account information to receive a direct rollover or the plan would roll you balance to an IRA they opened. Did you get any letters to this affect? I would call the PSA benefits Dept and ask for a better explanation of what happened here. Did you change addresses since you left the company and did not notify them? What is your estimated plan balance?