Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
401(k) after tax contributions 50 yrs old
Old 07-12-2012, 05:13 PM   #1
Confused about dryer sheets
 
Join Date: Jul 2012
Posts: 5
401(k) after tax contributions 50 yrs old

I am 50 years old and took a Retirement Incentive Offer due to the selling of my company. Iím getting ready to roll over my 401K into my IRA. I have $13,750.00 in after tax contributions. If I have that portion sent to me in a check will I have to pay the 10% penalty?
__________________

__________________
SM4456 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-12-2012, 05:25 PM   #2
Thinks s/he gets paid by the post
frayne's Avatar
 
Join Date: Oct 2002
Location: 19th Hole
Posts: 2,535
Nope. I over funded my 401K throughout the years to the tune of $30K+. When I rolled over my 401 into an IRA, I was issued a check for the amount over funded that tax had already been paid.
__________________

__________________
A totally unblemished life is only for saints.
frayne is offline   Reply With Quote
Old 07-12-2012, 05:30 PM   #3
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
Quote:
Originally Posted by frayne View Post
Nope. I over funded my 401K throughout the years to the tune of $30K+. When I rolled over my 401 into an IRA, I was issued a check for the amount over funded that tax had already been paid.
+1

That mirrors my experience.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 07-12-2012, 07:55 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,485
Quote:
Originally Posted by REWahoo View Post
+1

That mirrors my experience.
+2 same here
__________________
pb4uski is offline   Reply With Quote
Old 07-12-2012, 07:58 PM   #5
Full time employment: Posting here.
tightasadrum's Avatar
 
Join Date: Aug 2006
Location: athens
Posts: 802
+3 Me too. But beware. That after tax cash will vanish unless you have a plan for investing it quickly.
__________________
Can't you see yourself in the nursing home saying, " Darn! Wish I'd spent more time at the office instead of wasting time with family and friends."
tightasadrum is offline   Reply With Quote
Old 07-12-2012, 08:17 PM   #6
Full time employment: Posting here.
 
Join Date: Jan 2011
Posts: 575
Quote:
Originally Posted by frayne View Post
Nope. I over funded my 401K throughout the years to the tune of $30K+. When I rolled over my 401 into an IRA, I was issued a check for the amount over funded that tax had already been paid.
I plan to convert some of my 401k into Roth IRA. Can I withdraw the over funded amount and use to pay for taxes?
__________________
KingB is offline   Reply With Quote
Old 07-12-2012, 08:21 PM   #7
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
Yes. You've already paid Fed taxes on that money so you can spend it as you please. There may be some state tax issues but I'm not aware of any.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 07-12-2012, 08:52 PM   #8
Thinks s/he gets paid by the post
frayne's Avatar
 
Join Date: Oct 2002
Location: 19th Hole
Posts: 2,535
Quote:
Originally Posted by KingB View Post
I plan to convert some of my 401k into Roth IRA. Can I withdraw the over funded amount and use to pay for taxes?
AFAIK, you could use the money any way you see fit as taxes have been paid on the amount you put into your 401K in excess of what was allowed during any particular year. Just my two cents but it would be wise to check with the firm that administers your 401K just to be on the safe side.
__________________
A totally unblemished life is only for saints.
frayne is offline   Reply With Quote
Old 07-12-2012, 09:59 PM   #9
Confused about dryer sheets
 
Join Date: Jul 2012
Posts: 5
I want to thank everyone for there responses, but I am not sure what "over funded" means in this instance. The money was put in prior to 1986.
__________________
SM4456 is offline   Reply With Quote
Old 07-13-2012, 11:06 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,863
I assume over funded means contributions in excess of of the allowed yearly limit. Those would be post-tax contributions.
__________________
Animorph is offline   Reply With Quote
Old 07-13-2012, 01:29 PM   #11
Thinks s/he gets paid by the post
frayne's Avatar
 
Join Date: Oct 2002
Location: 19th Hole
Posts: 2,535
Quote:
Originally Posted by Animorph View Post
I assume over funded means contributions in excess of of the allowed yearly limit. Those would be post-tax contributions.
That would be correct.
__________________
A totally unblemished life is only for saints.
frayne is offline   Reply With Quote
Old 07-13-2012, 07:47 PM   #12
Confused about dryer sheets
 
Join Date: Jul 2012
Posts: 5
Back to the original question the post tax money is not in excess if they make a check out to me will I pay a 10% penalty because of my age on the $13,700
__________________
SM4456 is offline   Reply With Quote
Old 07-13-2012, 08:02 PM   #13
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,149
Quote:
Originally Posted by SM4456 View Post
Back to the original question the post tax money is not in excess if they make a check out to me will I pay a 10% penalty because of my age on the $13,700
I don't see how this can be the case if what you said here is correct:
Quote:
Originally Posted by SM4456 View Post
Iím getting ready to roll over my 401K into my IRA. I have $13,750.00 in after tax contributions.
If you made after tax contributions to your 401k, you've already been taxed on that money and you should not be subject to the 10% penalty regardless of your age.

Who is saying you'll be charged the 10%?
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 07-13-2012, 09:02 PM   #14
Thinks s/he gets paid by the post
frayne's Avatar
 
Join Date: Oct 2002
Location: 19th Hole
Posts: 2,535
Quote:
Originally Posted by SM4456 View Post
Back to the original question the post tax money is not in excess if they make a check out to me will I pay a 10% penalty because of my age on the $13,700

Your best bet for peace of mind is to ask your 401K administrator, as REWahoo has stated based on the information you have given you will not be penalized 10% as the money you are taking out was never tax deferred to begin with.
__________________
A totally unblemished life is only for saints.
frayne is offline   Reply With Quote
Old 07-14-2012, 02:18 PM   #15
Confused about dryer sheets
 
Join Date: Jul 2012
Posts: 5
Thank you Frayne that is a good point "the money I am considering taking out was never tax deferred to begin with" I will check with my 401K administrator. The first guy I spoke with at Fidelity did not leave me with a warm and fuzzy feeling. He was not sure when I asked him the question and was going to get back with me, have not heard from him since. This forum has been a great help in the past and I want to thank you all for taking the time with my concern. The total 401(k) is $100,000 Plus (changes each day) I was thinking of taking just the $13,750,00 out of it. The sensible part of me says to invest it in a ROTH 401(k)
__________________

__________________
SM4456 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 11:01 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.