[milwaukee mike]

here's a winner for tonight (to keep this in player's talk where it belongs) - texas rangers-144

ok as some of you might know i am a cpa (for 17 years now).

since the board has been friendly and helpful lately, i thought i'd offer my services for simple questions/issues.

if you have a question about something tax-related throw it out here or give me a pm

[acl123]

Is there a loop hole that allows me to cash out my 401K penalty free?

[milwaukee mike]

Is there a loop hole that allows me to cash out my 401K penalty free?

i assume you're under 59 1/2 years old, so there is not only an income tax on the withdrawal there is also a 10% early withdrawal penalty (and 3.33% wisconsin penalty here)

other than exclusions like first time homebuyer, medical expenses, college costs (and those have serious restrictions) the best way is to call it a series of periodic payments.

based on your life expectancy you can take out a portion each year penalty free. but you have to run the numbers based on life expectancy and take out the same amount each year.

[milwaukee mike]

the other alternative is to take out a 401k loan, in which you can get up to 50% of your retirement funds now, and then pay yourself back over time.
that way it isn't subject to income tax OR penalty.

even if you avoid the penalty, it's often a really bad idea to take out retirement money. chances are, at retirement, there might be little or no taxes on the distributions.

[acl123]

i assume you're under 59 1/2 years old, so there is not only an income tax on the withdrawal there is also a 10% early withdrawal penalty (and 3.33% wisconsin penalty here)

other than exclusions like first time homebuyer, medical expenses, college costs (and those have serious restrictions) the best way is to call it a series of periodic payments.

based on your life expectancy you can take out a portion each year penalty free. but you have to run the numbers based on life expectancy and take out the same amount each year.

Thanks Mike.I havent contributed to it in years.I hate having part of my retirement relying on the stock market.I dont mind the penalty but the only way i see to get your money out is a hardship loan.Its my money i should be able to get it.

[milwaukee mike]

Thanks Mike.I havent contributed to it in years.I hate having part of my retirement relying on the stock market.I dont mind the penalty but the only way i see to get your money out is a hardship loan.Its my money i should be able to get it.

if you don't want the money relying on the stock market, you can always switch it to a bond fund or other investment INSIDE THE 401K. there should be no fees or anything associated with transfers to different investments inside the 401k.
check with the plan, there is probably easy online access to your account and then you can see exactly what it's invested in.

if there is a match, i would always recommend contributing enough to get the match (for example, if they match 100% of the first 4% of wages then contribute 4%).

if there's a match, with matching and tax savings, you are probably tripling your money right off the bat.

[milwaukee mike]

there was a baseball pick in this thread?

just for future reference what else would i need to stay in players talk?

[High3rEl3m3nt]

Mike, appreciate this thread and I might need your advice in the future. Question, do you list your winnings on your returns?

[sickler]

Mike, I have a question a cpa would know, but this is in Canada so your US wisdom might not apply.

Is there a good reason why money in an estate account at the bank isn't earning interest? Is there a reason why the estate trustee would put it in an account that doesn't earn interest?

[milwaukee mike]

Mike, I have a question a cpa would know, but this is in Canada so your US wisdom might not apply.

Is there a good reason why money in an estate account at the bank isn't earning interest? Is there a reason why the estate trustee would put it in an account that doesn't earn interest?

yes there could be a couple reasons. Interest income would have to be reported by the trustee, and with money market interest being next to nothing, it might be more trouble than it's worth...
not knowing canadian laws in that respect, here there are $ amount cutoffs to where it's not breaching fiduciary duties by leaving it in non-interest bearing accounts.

again, I think with rates being close to zero, a trustee probably isn't going to be challenged unless the numbers are huge

[milwaukee mike]

Mike, appreciate this thread and I might need your advice in the future. Question, do you list your winnings on your returns?

I won't comment on my personal tax situation. Everyone has to make that decision for himself, and weigh the pros and cons

[sickler]

yes there could be a couple reasons. Interest income would have to be reported by the trustee, and with money market interest being next to nothing, it might be more trouble than it's worth...
not knowing canadian laws in that respect, here there are $ amount cutoffs to where it's not breaching fiduciary duties by leaving it in non-interest bearing accounts.

again, I think with rates being close to zero, a trustee probably isn't going to be challenged unless the numbers are huge

Thanks Mike...it's a lot of money, over a year earning nothing. I think the trustee thought the estate would be settled and the book closed on it a year ago. Also might have something to do with a tax return. One was done earlier this year.

[Chi_archie]

bump for the end of the year

Mike is thee anything left for first time homeowners?