Taxes and Your 401(k)

Will I owe taxes on my rollover?

Typically no, if you roll over your money directly from your company plan into an IRA. This means that your company plan makes the check payable to your IRA’s custodian and that check is deposited to your IRA.

 

Do I need to report a rollover on my tax return?

Yes. You will receive two tax forms — an IRS Form 1099R reporting that you took a distribution from your former employer’s plan and an IRS Form 5498 reporting that you made a rollover contribution to your IRA. Even if no portion of your rollover is taxable, you must report it on your tax return.

 

Inheritance and Your 401(k).

What if I inherited a retirement plan?

Beginning in 2007, non-spouse beneficiaries can roll over all or part of an inherited employer-sponsored retirement plan to a new inherited IRA. In the past, non-spouse beneficiaries only had the option to leave assets in the existing plan, and follow the distribution rules associated with the plan, if the plan allows. This change in tax law allows anyone who inherits an employer-sponsored retirement plan — domestic partner, child, other family member, or friend — to roll over to an inherited IRA and benefit from continued tax-deferred growth, while taking distributions over their own lifetime. If you think these tax law changes might benefit you, check with the employer plan administrator to see if the plan has adopted these provisions.

 

Disclaimer

 

Securities and Advisory Services Are Offered Through VSR Financial Services, Inc., a Registered Investment Adviser and Member FINRA and SIPC. Michael Sylkatis is independent of VSR. A Registered Representative may only transact business in states where they are registered, or exempt from registration. Currently we have Representatives registered in TX, CA, IL, IA, KS, LA, MA, MN, NE, and OK. If your resident state is not listed, please contact us at 972-346-3046. Under normal circumstances, securities licensing procedures for additional states may take 24-72 hours. We will not effect or attempt to effect securities transactions, or provide personalized investment advice to, or communicate directly with residents in a state in which a Representative is not registered.