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Old 11-17-2012, 07:17 AM #1
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Join Date: Oct 2002
Location: Logansport/Culver, IN
 has been a member for 10 years
Rollover or withdraw 401k money

Hello all, just a quick question for you guys.

I have $600 dollars in my old employers 401k plan. Yah, I know, small potatoes. Thats why I'm thinking about just taking the penalty and then depositing it in my ING Roth IRA.

I have read that I can't roll it directly to a Roth. I would have to set up a traditional IRA to use as the go-between. But, for $600 dollars I dont know that this would be worth it?

I'm 25. I didnt know if someone could give me a guesstimate at the penalty amount we are talking? At the old employer I made 27000 a year, at my current job I make 29000. If that matters.

I appreciate the help! I just dont wanna hassle with setting up a traditional IRA to save 20 bucks, ya know?
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Old 11-21-2012, 02:03 PM #2
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Why would you want to pay tax on money that already resides in a tax deferred account? Roll it to an IRA and keep it tax deferred.
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Old 05-15-2014, 08:58 AM #3
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I agree with blueshifty, keeping the money as tax deferred as possible will probably prove most beneficial especially considering it will already be taxed
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Old 07-02-2014, 10:53 AM #4
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Your new employer might even let you roll it into their 401k plan. You should explore that as an option as well.
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Old 07-08-2015, 09:29 PM #5
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Roll it.
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Old 12-04-2015, 11:26 PM #6
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You don't need to open a traditional IRA, you will only need to pay ordinary income taxes on the $600. You will NOT have to pay a penalty.

Call your 401(k) institution and let them know that you would like to do a direct rollover into your Roth IRA @ ING. This is considered a Trustee-to-Trustee transfer and will allow you to avoid having them withhold federal taxes from the check amount. They will need to make your check payable to your ING account F.B.O. your name.

Then simply deposit this check into your Roth and you'll receive a 10-99 in January.

If you don't mind them withholding federal tax so you can avoid paying it back in January, you can take a full distribution of your 401(k) and you have 60 days to deposit it into your Roth to avoid the penalty. As long as you deposit the same dollar amount into your Roth within 60 days there will be no penalty. This is called an in-direct 60 day rollover contribution.
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