Nothing proprietary as I have 100% invested in publicly available options via the Fidelity "Brokerage Link" option in my 401K.
401K Distributions
- Thread starter Yipper
- Start date
Nothing proprietary as I have 100% invested in publicly available options via the Fidelity "Brokerage Link" option in my 401K.
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Sounds like the in-kind transfer should definitely work. As someone mentioned the broker link feature is not offered by all 401k plans but it should not affect in/kind transfer.
CincyDave
Thinks s/he gets paid by the post
It depends. Best to talk to the plan administrator. For example, with my 401K plan, I (NOTE: I am over age 60) can take a distribution of any amount from my Fidelity 401K at any time. The only variance is that if I want to take a distribution from one or more specific funds with specific amounts (instead of withdrawing from all funds, spread across them based on their percentage of the 401K), I have to call.
I can also schedule automatic periodic distributions, but do not have a need for that.
I have done this to cover taxes (in lieu of quarterly estimated tax payments), to rollover to my tIRA (also at Fidelity, I have to call for this action but it is a smooth process and no tax issues) and once (the first time) just for fun, after I retired.
My company 401k is with Fidelity and works just like Jollystomper stated above with one exception. My withdrawals have to be taken prorata over all investments. The SDP was silent on this issue, but I called Fidelity and they confirmed this.
OP, that's unusual that you could only take a total lump sum. Have you tried to walk through the withdrawal process on Fidelity's website?
DGF has the same issue with her MegaCorp 401K at Fidelity. All distributions must be taken from each position in her 401K on a prorated basis. Therefore she has to place a call to Fidelity when she wishes to make a withdrawal. She will be rolling it over to an IRA in 2024 when she turns 65 (and dropping ACA) so monthly automated withdrawals can begin in 2025.
CincyDave
Thinks s/he gets paid by the post
I can't even pick which investments to withdraw from even with a call to Fidelity. It's probably been almost two years since I've checked, so I guess I should call to see if anything has changed.
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
My megacorp 401k is also at Fidelity and is limited to pro-rata withdrawals. I am pretty sure that was megacorp’s decision. It’s no big deal since I can rebalance daily but prorata maintains my AA so that is generally what I prefer. I remember the early days when you could only rebalance a few times per year.
Car-Guy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Your posts says a lot about the "fear" that some governmental agencies can instill in many of us (I didn't say all) here in the US. It's probably best if I stop with my comments there!
Fermion
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
For us, with a big 401K at Fidelity, we just rolled part of it into a IRA then set up 72t on that to give us $25,000 a year each November. Coming up on the second payment soon. Because we manage our MAGI, we pay 0% tax on it too, which is nice. Actually, last year I got $1 back, but I strive for $0.
We are age 53,54 though so are restricted to using stuff like 72t, which is fine. I also kind of like that we can take out $25k but since I have it in 5%+ bonds, the balance keeps going up (yes I know, inflation, but still it is nice)
We are age 53,54 though so are restricted to using stuff like 72t, which is fine. I also kind of like that we can take out $25k but since I have it in 5%+ bonds, the balance keeps going up (yes I know, inflation, but still it is nice)
- Joined
- Apr 14, 2006
- Messages
- 23,107
I don't fear the IRS, because I pay my taxes in full and on time. I am a complete boy scout about it and never even get close to the edge. If it takes fear to make others do the same, then I'm all for fear. I really dislike tax evaders.
Car-Guy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Never cheated on my taxes either but they have been complicated some years. Gone through a few audits and it always feels like they are just trying to find something. Maybe they get "points' for finding something, even just errors. But so far, it's cost me nothing other than my time and some stress.
Last edited:
All I did was an IRA rollover between bank custodians... doesn't sound like "getting close to the edge" to me.
The IRS, with no charges, no hearing or trial, and no communication as to what their issue was other than they considered the rollover to be a distribution but no info as to why, was going to seize all of my bank accounts. Guilty until proven innocent with no hearing.
I was in the local IRS office within 48 hours (not including weekends when they are closed) of receipt of each (of many) "your response is not good enough" letter from the IRS. Each time speaking with the local agents, walking them through documentation, and each time being told "this ought to resolve it".
The only resolution was I engaged the tax payer advocate office who provided me with an unpublished direct phone number to the special IRS group in Texas that handles IRA "audits". Dialed it, spoke with somebody for 5 minutes and was told essentially a Roseanne Rosannadana "ah... nevermind" and no proof/documentation to backup my verbal statements were required. No additional taxes nor penalties due. So I too "pay my taxes in full and on time" and didn't evade any taxes.
Do you honestly believe any faceless bureaucrat should wield that amount of unchecked power over somebodies life?
To add a 3rd line to the old saying :
A Republican is a Democrat who has been mugged.
A Democrat is a Republican who has been arrested.
A Libertarian is a taxpayer who has been audited.
- Joined
- Apr 14, 2006
- Messages
- 23,107
So you got it resolved without being arrested or having your bank accounts seized. Sounds like a win to me. Or do you think they should just let everyone slide without checking? You sound like an honest person, but you know there are people who evade taxes. I want them caught and made to pay.
Eight months of hell and almost losing my life savings sounds like a win to you.... Wow.
- Joined
- Apr 14, 2006
- Messages
- 23,107
I'm sure it was a monumental pain in the butt. However, there is a very specific process that the IRS must follow to collect from you. It gives you multiple levels of review and appeal, up to the U.S. Court system if necessary. No one "faceless bureaucrat" has the power to take your property without due process.
I hope something like this never again happens to you, but I am including this link as it might help others who are having their own issues with the IRS.
https://www.irs.gov/pub/irs-pdf/p594.pdf
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I don’t fear them either but you are mistaken to think paying taxes in full protects you. We’ve had problems caused by bank errors and dealing with IRS to get these corrected is a huge hassle. It feels like harassment because its a huge bureaucracy that seems to assume the worst when something goes wrong. (Full disclosure: DW works there and the intimidation of employees is 5X).
I pay my taxes in full to the best of my knowledge. However, I am expecting to be in trouble with the IRS. I keep waiting for the shoe to drop and I am extremely nervous when I think about it.
My DH had after tax money added to his 401K eons ago. I had not heard of the IRS form 8606. I did our taxes and never completed that form. I don't remember how many years we sent the after tax money to his traditional 401K or when we did this. I never heard of the 8606, until I read about it on this site. I know that ignorance of the law is no excuse. Last year we rolled over $100,000 from his 401K to an IRA at Vanguard. They sent us a check for $3000 something that was after tax money, which we cashed. The form that they sent to us showed that it was after tax money. I was hoping that the IRS would get in touch and let us know what we need to do regarding this. I would like to rollover some additional money, in order to keep buying Treasury bonds, but afraid to do it, since it would compound the problem.
Does anybody have any idea of how to fix this? I have thought about contacting the IRS and telling them what I did. I thought about going to an accountant and see if we could pay them to fix it for us, but I don't even have the information to give them, for us to fix it.
I really wish that we had never contributed the after tax money to his 401K. Unfortunately, I am the one that told him about it and encouraged him to do it.
- Joined
- Apr 14, 2006
- Messages
- 23,107
Ultimately, it does. If I am right that I have paid my taxes in full and they are wrong, and I can prove it, if I have to go to court against them, I will win and they will lose. If it's an interpretation of law, it will be more difficult, but if it is just a factual question of did you or did you not pay, then I am confident about that.
Last edited:
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Here they sent 4 letters ,but really according to their own rules they only need to send 2.
Always best to stay friends with your mail delivery person as they could screw you over by "losing" your IRS letters.
They took everything except the house and bed...
https://www.latimes.com/archives/la-xpm-1989-11-30-ca-19-story.html
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Besides all the anxiety, and sleepless nights, how much in travel costs and lawyer fees will it cost you to fight the tax dept in taxation court ?
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Overall, I wouldn't worry.
By putting in after tax money, at worst you are going to pay tax on it again when withdrawn.
It would be best to look up old tax forms, 401k records to see how much you contributed after tax.
Who decided to send you $3,000 when you did the rollover ? Was it your request or without a request Vanguard just sent it ?
It's quite possible in the sending of the $100K , that $3K was documented as after tax contribution, which would legitimately be allowed to be put in a Roth when doing an 401K to IRA rollover. If you didn't have a Roth, then sending you cash would be the next option.
- Joined
- Apr 14, 2006
- Messages
- 23,107
I never have anxiety or sleepless nights about anything. I would expect, if I have the proof and discuss it with them, that the IRS lawyers will recommend giving up. They aren't stupid and don't want to go to court with a clear loser case. But if they insisted on moving forward, again assuming I have solid proof, I would seek summary judgment, which if granted requires only one trip to court. I would probably represent myself.
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Trust me (and others in this thread), your expectations do not match reality.
I related some of my story a while back, a simple typo in the EIN of the final 1031's for my MIL/FIL. IRS cashed the small checks that were due (~ $200 total), but they didn't get credited to the right accounts, so the IRS says we didn't pay.
When I realized the issue, I tried calling to get it straightened out. So I had the proof, the correct EIN docs, the cashed checks. But "discuss it with them" was not so simple. Hours and hours on the phone for days and days. Can't get through. The taxpayer assistance groups had voicemail/answering machines that were full, I couldn't leave a message.
The only contact info was that phone #. It took weeks and many days/hours on hold. Sometimes, after getting the message for several hours, "hold on, you will be handled in the order received", I'd hear another beep, I figure "I'm in!", but no, the message is "All agents are busy, call again later - click".
Then I start getting the letters that they will freeze my accounts, and I'm in the process of buying/selling homes, I don't need any more complications. When I finally get through, they just refer to those as 'scare' letters. Well, it worked - a threatening letter from the IRS is scray. I don't care if someone says it's a long process before they do anything, I don't need that, especially when I can't get anyone to talk to to resolve it.
After that, I still had to try to get through several more times to get it straightened out (which it appears to be, but who knows?).
Last year, years after his final 1031, we received a 1099-INT from IL for the interest on some lost property that we recovered from FIL estate, so now we had to claim that as income. So now I have to file again, OK, all done. A few weeks ago, I get an IRS letter - Oh no! They claim I didn't sign the 1031! What the heck, I have scans of everything I sent them, including a picture of the forms and addressed/stamped envelope all together, so I know the signed copy went into the envelope - they are all signed!
So now I have to wait to see if my response satisfies them. So yes, I cringe when I see an envelope from the IRS.
It's easy to say "don't worry" if you've never had to deal with them in this way. It's a real pain, and anxiety maker.
-ERD50
Car-Guy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
^^^^^
I pretty much agree with everything you said above. OTOH, my last audit everything was handled by mail and was pretty straight forward. I received a letter saying I owed another ~20k on my taxes for that year. After reading though the letter I immediately knew what had happened. I wrote up a response and sent it in with copies of supporting documentation. Case was then closed. It still took 6 to 8 weeks IIRC. A bit stressful, even when you know you are right.
I can remember many years ago, it's wasn't that hard to call the IRS and get a live person to help you, not so anymore. Taxpayers are pretty much on their own. Either figure it out yourself, and hope you got it right or hire a professional, and hope they get it right.
I pretty much agree with everything you said above. OTOH, my last audit everything was handled by mail and was pretty straight forward. I received a letter saying I owed another ~20k on my taxes for that year. After reading though the letter I immediately knew what had happened. I wrote up a response and sent it in with copies of supporting documentation. Case was then closed. It still took 6 to 8 weeks IIRC. A bit stressful, even when you know you are right.
I can remember many years ago, it's wasn't that hard to call the IRS and get a live person to help you, not so anymore. Taxpayers are pretty much on their own. Either figure it out yourself, and hope you got it right or hire a professional, and hope they get it right.
Last edited:
ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
With the EIN problem, there was no option to mail in anything, only the phone # to call to be put on hold (and I think IRS offices were still closed from COVID, so even that wasn't an option).
My recent "you didn't sign your 1031" letter, they did just ask me to sign the letter and return it and that would suffice. So hopefully, that's done....but.... I got the exact same letter 2 weeks later, and each of them had a slight variation of the name/address. You'd think that would be computerized. So I'm hoping that returning the one closed the loop between the two, but I'm sure I won't know for another year or two.
-ERD50
