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Looking for some TAX Advice....
Serious post here Men...
My wife and i both changed jobs this year, my earlier in May and her just a few weeks ago.
We both had 401K loans out at the time of leaving the jobs.
We aren't able to pay the loan off IN FULL prior to the 90 days following leaving the job.
i accept we will have to pay taxes on the loan as if it were income, its a bit of a fukked up rule by the IRS, but its reality.
Is there ANY way to offset this? Its a fairly significant hit we are going to take..
i'm sending you an email
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cool!Originally Posted by milwaukee mike
Got your Mail Mike...i had one more question, so take a look!
Yea good idea asking for tax advice on a gambling forum.
Why not? That's the awesome part of SBR - people from all walks of life meet up at one place with a common bond.
many accountants and lawyers post here, why not help out fellow posters with info sharing ?
Why not go to a Tax forum and see who they like in the Jets game then.
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Normally would agree but Milwaukee Mike is a CPA
And again, why not? SBR is primarily full of recreational gamblers. You think that accountants don't watch sports?
Not a CPA but if I believe you can borrow up to 50%. Therefore the remaining 50% would\could be transfered to the new 401K. If they allow that then borrow 50% from the new 401K and pay the old.
good angle....
When I left my last job, I closed out 401K. Got raped hard on penalty.
a couple problems with this. new job probably has an employment time period before you can be eligible for the retirement plan. even if they don't, your new 401k balance in 90 days will be peanuts compared to the old one.
I need to come up with a money losing business before Dec 31st
start a handicapping service....sorry that one was right over the plate
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Why is it a fvcked up rule by the IRS to tax you on the loan.
1) you contributed tax free income to a 401 k
2) you experienced tax free growth
3) you took a free loan against your tax free account
4) when taking the loan you got money tax free
5) you didnt repay the loan to your 401k so now the money that didnt get ever taxed is getting taxed.
If the IRS didntdo this ppl would contribute 50% of income to 401k, take out a loan, not repay, and nvr pay taxes.
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As far as tax advice goes, and im not a accountant...
Wouldnt this loan, lets say 10,000. Just be added to your income for the year and taxed appropriately? Or is the IRS requiring a payment of taxes on this individual account. Assuming you made 50,000 last year this extra 10,000 added to your adjusted gross income will only leave you with a approximate 1200 tax liability.
yes its added to other income. +a 10% penalty on the tax return for early distribution before age 59 1/2 (unpaid loan is treated as a distribution)
Mike
Distributions AND loans also take the 10% hit. I thought it was only on withdraws. Good to know.
If its added to income brock actually has til april to pay and like 85% of americans that dont pay any taxes after AGI is calculated, he'll be fine.
Moral of the story... Don't borrow from your 401k
loans DON'T get taxed or penalized at 10%. unless they don't get paid back as required, then it's not a loan it's recharacterized as a distribution.
so if the balance is 10k and the loan against it is 4k, the 6k gets moved to the new plan and the 4k you took out and didn't pay back gets taxes, because you put it in pretax.
This is the biggie. It's taxable plus 10%. Normally the people that do this and are in a bind and end up being in a high tax bracket that year even though it was an emergency bailout and they get kicked in the nuts with an extra 10%.
This is type of thing is nothing new though. Our government taxes ur pay, then makes u pay social security (this is for your own good because you don't know how to save like the gov.), forces the employer to match ur payment and send it to the gov., then when ur old enough to start getting some back it gets taxed again if you still work or were smart and saved or invested ur money and receive even a modest income from it.
Imagine going into a casino with $100. Before you play the government takes $4.20 out of ur hundred because they think ur too stupid to save enough for gas money on the way home. Then they make the casino pay them $6.20 for your $100. It's more than ur $4.20 because they decided casinos are evil. Surprise surprise, you ended up ahead after an up and down poker session. It's 11:00 pm and ur ready to go and want ur $4.20 back.
Well you can have it back but the gov gets to take $1.05 because you ended up winning, plus an extra $.42 because you want to leave the casino before 2:00 am. What happened to the $6.20 the casino paid in? Who the fuk knows.
Just run a tout site with your rubberband plays..
Really funny !
This is actually pretty funny.
Salad!
Just claim your life as a money losing business. Print out your posting forum history. It would back up your claim if the IRS audited you.
Ya really have to love how people glamorize their life on here, yet husband and wife earning big bucks have to take out 401k loans.
the 401K loans were to clean up messes of mine from the past pal
Maybe take out a Prosper loan to pay the 401k back?
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gauchojake gave Bostongambler 2 SBR Point(s) for this post.
