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$30,000 After tax contributions in my 401K. $282000 Total what is the best way to manage this preparing for retirement?

I don't want to pay more tax than necessary and I shouldn't be in great need of withdrawals as soon as I retire.....(around 60/62 is the plan) Does this need to be moved to an IRA and what kind? thank you

Oct 01, 2013 by C from Foristell, MO in  |  Flag
4 Answers  |  7 Followers
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2 votes

There is alot of information that needs to be clarified through a discovery process before I or anyone can make a recommendation as to what to do. Keeping it in the same registration will allow you to maximize your tax deferred status. There is a stage called pre retirement, which is about five years before one starts to draw on their assets. If you are within this time frame then you need to take care on how to invest the assets in case of a severe downturn in the markets. Hope this helps. Good luck, Dan

1 Comment   |  Flag   |  Oct 01, 2013 from Asbury Park, NJ
Helen

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Flag |  Jan 04, 2014 near Los Angeles, CA

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2 votes

Setting aside how the funds should be invested (which as correctly stated don't have enough information) I think you are asking about moving the funds from the 401k after you leave the company. You state "Shouldn't be in great need of withdrawals..." but if you may be before age 60 and need to use these funds, you may have more flexibility after age 55 if in 401k. If you won't need the funds before age 60 your likely lowest cost and most flexibility is a direct rollover to traditional IRA (assuming not a Roth 401k) for all but $30k of after-tax contributions plus related earnings which must be paid to you and taxed on earnings (but not the contributions).

View all 5 Comments   |  Flag   |  Oct 01, 2013 from Western Springs, IL
Kirk A. Kreikemeier, CFP®, CFA, FSA

C... thanks for clarifications. Since will do after 59 1/2 there is no 10% tax penalty and access to funds concerns so can transfer pre-tax activity to traditional IRA. But yes your $30k after-tax + related earnings cannot be rolled into the traditional IRA. You will not have to pay tax on the $30k you contributed (since you already paid taxes on those funds) but will on the related earnings. Your 401k provider will have these funds identified, my guess is even on current statements. Enjoy.

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Flag |  Oct 02, 2013 near Western Springs, IL
Kirk A. Kreikemeier, CFP®, CFA, FSA

I stand corrected... as Michael points out below you can rollover your after-tax contributions and earnings. But make sure you officially make note of after-tax amount on IRS forms so when begin withdrawals down road you can exclude from taxes.

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Flag |  Oct 02, 2013 near Western Springs, IL

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Let me answer the question for you When you going to do a rollover separate after tax from pre-tax this is the cleanest way to do that This way you get your after tax money "tax free" back to you Now I would suggest sitting down with a planner to put together a detailed income plan But this should answer your after tax question You can also convert after tax right in to a Roth IRA as well, talk with CPA though before you do that Let me know if you have any additional questions Sincerely Michael (860)341-4500 Founding Partner Visionary Private Wealth Management Group

1 Comment   |  Flag   |  Oct 01, 2013 from Farmington, CT
Michael V Mezheritskiy

Kirk one addition, please see my answer above, the only way to separate after tax from pretax is to do a direct rollover. So if you have 30k in After tax, if you rollover about 70k in to an IRA that will free up all of your after tax money. In this situation the earning on the After tax WILL rollover in to an IRA and you would not have to pay taxes on it. However if you take out a distribution, your after tax could be either a pre-86 contribution or post 86. if it is Pre -86 you CAN just take the after tax out by itself with out earning, most likely your contributions are Post-86 and if you take a withdrawal, then Kirk is right the earnings will come out as well. As I said if you have any question on it, Please call
me my contact info is in my comment.

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Flag |  Oct 02, 2013 near Farmington, CT

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1 vote

Well, as I often begin my comments... that all depends. There is much information I do not know based on your question, and as such, am hesitant to actually make any recommendations. I don't know your age, your risk tolerance, your goals, dreams, etc.
It all depends your YOUR plans, goals, etc. In general, I might advise my clients to move the 401k into an individual IRA, where you have control over it, including what you invest in. First time I've done this, but, if you'd like to have a conversation, please feel free to contact me... Again, I'm hesitant to make any recommendations without more information from you.

Best Regards, Rod Miller

1 Comment   |  Flag   |  Oct 01, 2013 from Springfield, MO
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Flag |  Sep 14, 2017

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