Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19371  
Subject: Re: roll over??????????? Date: 8/1/2000 5:51 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Greetings, Dovarro, and welcome. You wrote:

<<My father is retiring 8/11/00 so I do not have much time to advise him. He has an employee savings plan in the amount of 80,000. If he is issued a check from the company he will be taxed at the highest rate. Thus, where should he put the money for capital preservation and in order to not be taxed when he is issued the check. >>

First, stop your father from getting that check made out in his name. If he does, by law 20% must be withheld for potential income taxes. He would then have 60 days to roll the proceeds to an IRA to avoid taxes on the entire amount. The problem, though, is he only has 80%. Unless he made up the missing 20% from other resources and added it to the check he gets for the rollover, then the IRS will call the missing 20% a distribution and tax him on that amount. Sure, he might get a refund, but he has to wait until he files his taxes for the year before he does.

Instead of getting the check, he should have the plan directly transfer the plan money to an IRA in his name at a custodian of his choice. If he does that, nothing will be withheld and he will have no tax problem. Both his potential IRA custodian and his plan custodian know how to accomplish this, so all he needs to do is ask and they can guide him through the necessary hoops. Once in the IRA, he can then take only what he needs and pay income taxes on that amount.

Regards..Pixy
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement