The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Elementary, my dear watson||Date: 2/5/2000 11:02 AM|
|Author: pmarti||Number: 27309 of 124975|
<< 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administrator (Westinghouse) that the first withdrawals must be the $100,000 after-tax, and only after it is entirely withdrawn can I roll out the other $400,000.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.
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