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TIN401 · Dec 30, 2006, 01:04 PM

If you want to withdraw a 401 K, when is the last date for withdrawal for that year? Specifically, like in contributions, when you contribute you can wait till April of 2007 for year2006 tax return. Is this the same for withdrawal?

RichardBondMan · Dec 30, 2006, 07:19 PM

Originally Posted by TIN401

If you want to withdraw a 401 K, when is the last date for withdrawal for that year? Specifically, like in contributions, when you contribute you can wait till April of 2007 for year2006 tax return. Is this the same for withdrawal?

It's my humble opinion that you can withdraw anytime - I think you were asking in what tax year would the distribution be taxable and if I assume correctly your question, then it's my opinion that it would be taxable in the year that you receive the check. An important item to consider (even though you did not ask), are the tax consequences of a
401k withdrawla before your age 59 1/2 (I am assuming you are not yet 59 1/2). The penalties, tax consequences can be quite severe if you are not 59 1/2 yet.

AtlantaTaxExpert · Dec 30, 2006, 08:01 PM

Actually, it's taxed based on the date of the check. Example, if you withdrew this past Thursday and check was drafted this past Friday, but you got it in the mail on Tuesday, you would be taxed on the withdrawal for 2006, even though you got the check in 2007.

ScottGem · Dec 30, 2006, 08:02 PM

401K withdrawals should always be a last resort. Any withdrawal is taxable in the year the check was written. However, depending on the plan it could take several months from the request until a check is written.

AtlantaTaxExpert · Dec 30, 2006, 08:30 PM

I am in total agreement with Scott!

TIN401 · Dec 31, 2006, 10:53 AM

Thanks for all your answers. They help me in understanding 401 K. My reason for asking before was because in 2005 we had a situation where our adjusted gross was almost zero. For 2006 we had special assessment RE taxes due to our major renovation of our house. My wife's 401 K contributions were over the limit also for the past few years. We are almost at retirement, i.e. we are over 64. However, the question is moot for 2006 now, since we would not get a check with a 2006 date, since it is too late for that.

TIN401