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About Carole Dunton
Expertise
Preparation of individual income tax returns including social security, pensions, lump sum distributions, sale of personal residence, stock and mutual fund sales, distributions from individual retirement accounts, moving expenses and itemized deductions. General knowledge of schedule C for small sole proprietorships. No experience in corporate, estate, partnership or large business returns.

Experience
9 years as tax preparer for major national firm.

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Tax Law (Questions About Taxes) - 401k

Expert: Carole Dunton - 11/2/2009

Question
Carole,
Are there any Tax and Penalty exceptions when cashing out a 401k to purchase farmland?

Answer
Hi,

In order to avoid tax you have to roll the 401(k) to a Traditional IRA or another employer's qualified plan.

There are exceptions to the penalty. They are (1) distribution made to an employee who has attained age 55 and separated from service; (2) distribution is part of a scheduled series of substantially equal periodic payments made over the life expectancy of the participant; (3) distribution made due to total and permanent disability; (4) distribution to the extent unreimbursed medical expenses exceed 7.5% of AGI; (5) distribution made to an alternate payee pursuant to a qualified domestic relations order; (6) distribution due to an IRS levy; (7) distribution to reservists while serving on active duty for at least 180 days.

Regards,
Carole

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