The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: Elementary, my dear watson Date:  2/5/2000  11:02 AM
Author:  pmarti Number:  27309 of 127547

<< I guess what this means is that the $100,000 in after-tax contributions can't be put into the IRA, but the $400,000 can. However I'm told by the plan administrator (Westinghouse) that the first withdrawals must be the $100,000 after-tax, and only after it is entirely withdrawn can I roll out the other $400,000.

Which means, I guess, that I'm making an "early withdrawal" of the $100,000, since it can't be rolling into a self-directed IRA, and therefore I will pay the early withdrawal penalty as well as interest on the gain? >>

Let me phrase it a different way, because I'm not sure we're saying the same thing.

Your after-tax contributions to the 401(k) ($100,000?) have already been taxed. There is no tax consequence to you when you withdraw them. You will pay income tax on the earnings on the after-tax contributions. You will also pay the 10% penalty, unless an exception applies, on the earnings.

Phil Marti
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us