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Author: ralph710 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Re: basic 401(k) question Date: 6/21/2001 9:01 AM
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First of all - I'm not a tax expert.

Whatever money you withdraw from your 401K is added to your income and taxed at whatever rate that falls into. If you happen to have any pre-tax money in the 401K, that will not be taxed. I do not think you can specify that you want to withdraw only the pre-tax money, i.e. it is withdrawn in a proportional manner. You can roll the 401K into an IRA and any pre-tax money will be distributed to you (it cannot be rolled into the IRA).

To state things another way: you would probably not want to take a full distribution of your 401K since it would be added to your income for that year and be taxed at your highest rate. If you do not want to leave the money in the 401K, roll it into an IRA and, depending on your age, start taking yearly withdrawals (possibly SEPP if your age is under 59 1/2).

That's the way I understand things. I hope I have stated it clearly.

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