AboutWillard R. Brumbaugh, LUTCF Expertise I have answered many questions regarding 401ks, IRAs and annuities as well as life insurance.
I have been counselling against most Qualified Plans since 1994.
Experience Ranked in the top 5 in retirement catagories at Askme.com most of its last 2 1/2 years. Organizations I belong to:
National Association of Insurance and Financial Advisors-California
Inland Empire Estate Planning Council
Education/Credentials Life Underwriters Training Council Fellow
Question Thanks for being an expert...I love this website!
I live in DC and will be moving to a job making $144K per year. My current company has a 401(k) but the new company does not. First, I want to know if I will be able to rollover 100% of 401(k) into my traditional IRA (regardless of the amount). Second, what is the best way to invest in my retirement beyond the traditional IRA limit since the new company does not offer a 401(k)?
Answer Dear Chris,
You need to transfer directly from your 401(k) into a "pour-over" IRA. This would be different from your yearly deposit IRA, since the deposit far exceeds your annual maximum.
If you were to receive the 401(k) to be deposited later, your employer would be required to withhold 20% to send to the IRS. If you did not restore that withholding, and you are less than 59 1/2, you would be subject to the 10% Premature Distribution Penalty along with income tax on that 20%.
By now I imagine that you are aware that you do not save on taxes by contributing to a 401(k), that you are merely postponing the inevitable. Building a tax advantaged retirement program is difficult at your income level. Could you provide me with your age, gender, family situation, and how long you expect your new employment will last?
Willard R. Brumbaugh, LUTCF
www.willardbrumbaugh.com
(888) 792-2379
