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Hi

I have been on the 401K Board and was directed here. The whole string is at: http://boards.fool.com/ira-mistake-29535043.aspx


And here is the last reply:

>> In order to maintain the tax free status of the transfer, it must be transferred to another IRA account. But that account can be at a discount broker allowing you to buy and sell stocks or mutual funds at will.

If the funds are transferred to a regular account, first they will take withholding, and you will pay income taxes on your gains and pay a 10% penalty. That is the expensive way. Keep it in an IRA.

Transfer to a regular account counts as a distribution. Partial distributions will be credited with a portion of the non-deductible contribution. A full distribution will be credits with all of it. But you will still pay a 10% penalty on the distribution.

If the account investments are worth less than your contribution, there may be a way to cancel the original contribution. For information on that aspect ask on the Tax Strategies board. They are the experts.<<




I did fail to mention that I am over 60, so no 10% penalty. The account has gained just under $3K on $22K in contributions, so I assume I would be looking at taxes on the gains. Basically, I just want to get this into an individual, non tax advantaged account where I can utilize some more complex option strategies.

Do I have the tax implications correct? Is there a trick to how to file my taxes next year to reflect only the gain and not the total amount?

Thanks
JIm
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