Expert: Allen - 3/19/2005

Question
DEAR SIR, IS IT POSSIBLE TO TAKE DISTRIBUTIONS FROM A 401K OR IRA PLAN WITHOUT INCOME TAXES ON THE DISTRBUTION  AMOUNT OF $60,000 PER YEAR UPON RETIRING AT AGE 70AND 1/2? THANKS,   PAUL

Answer
No taxes are withheld on a distribution from a 401k if the distribution is in the form of a life annuity, a joint and survivor annuity or another annuity under which payments will be made over more than 10 years. No taxes are withheld from any distribution from an IRA. So if you do not want taxes withheld and do not want to receive the distribution in a form of an annuity, you should have the money transferred to an IRA. You can then take the distribution in any form from the IRA.
Please note that while no taxes are withheld, you do not eliminate the tax liability. You will still have to pay taxes by next April 15. And if you have not had taxes withheld on the distribution or on other income, you may be liable for penalties on the late payment of taxes.