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    charity24's Avatar
    charity24 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Oct 25, 2006, 03:04 PM
    401k
    I have a 401k with less than a $1,000 in it. I wanted to know what the taxes would be? I quit that job and need to get it out. I need to know if I should transfer it of take it out?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Oct 25, 2006, 06:41 PM
    Transfer it into a rollover IRA. You can go to any bank, mutual fund or brokerage house and they will help you with the transfer. That way, you can get the money out tax-free and later transfer it into the 401K of your new employer.

    If you take it out and spend it, the custodian will withhold 20% (required by law). You will pay taxes at whatever your tax rate is for both federal and state PLUS a 10% early withdrawal penalty which cannot be mitigated. That means that you will pay the 10% penalty even if you owe no other tax.
    jboyle2's Avatar
    jboyle2 Posts: 2, Reputation: 0
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    #3

    Oct 23, 2011, 07:25 PM
    Did you start your business after leaving your old job? If so, you can open a Solo 401k and transfer your old 401k into it tax free (trustee-to-trustee transfer). A solo 401k is for the self employed and allows for rollovers, transfers and high contributions. You can learn more at: http://www.mysolo401k.net/Contributions.html
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #4

    Oct 24, 2011, 09:08 AM
    Jboyle - you should notice that (a) the original post is 5 years old and (b) the poster said nothing about starting a business.
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