I file taxes every year although my SS income is less than $15,000 due to the fact that I make small withdrawals from my 401(k).
I am 62 years old, filing single, no dependents.
Line 21 of my 1040 (Adjusted Gross Income) shows the total amount of the amount withdrawn. SS income does not show on the 1040.
In 2010 (present year), I received a $5,000 profit sharing income from a former employer which I directly rolled-over into my Rollover 401(k).
Will that amount be considered income when I file in 2011 and be added to whatever amount I withdrew from the 401(k) in 2010 as ordinary withdrawal (Line 21)?
Thank you.
Fri May 28, 2010 3:05 pm
coaster Senior Advisor
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I don't think so. From Tax Topic #412 on the IRS web site:
quote: (4) Roll over all or part of the distribution. No tax is currently due on the part rolled over. Report any part not rolled over as ordinary income.
.......
You may defer tax on all or part of a lump-sum distribution by requesting that your employer directly roll over the taxable portion into an Individual Retirement Arrangement (IRA) or to an eligible retirement plan. You can also defer tax on a distribution paid to you by rolling over the taxable amount to an IRA within 60 days after receipt of the distribution.
So if you had it directly transferred to the 401(k) OR took possession and rolled it yourself within 60 days AND the amount you receive is eligible for tax-deferred treatment, then in January of 2011 you should receive a 1099-R from the profit-sharing plan showing it as an eligible distribution not subject to income tax. You can just ask either the profit-sharing plan administrator OR the 401(k) manager/custodian with it was qualified as a tax-deferred distribution.
Without knowing any more than what you posted, my guess is that it is qualified and so that it's not subject to being taxed at this time.
The check was made out to Fidelity and sent to me by the Administrator to deposit myself. I immediately deposited the check at Fidelity within 2 days of receiving the check.
Thank you for putting my mind at ease. Happy Holiday.
Fri May 28, 2010 3:58 pm
coaster Senior Advisor
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quote:Originally posted by nemoryer Happy Holiday.
Same to you!! And if ya got it, fly it! (the flag)
It's really not all that complicated. Income is going to get taxed at some point. You want control of it now? It's income now and it gets taxed now. You willing to wait? It gets taxed at some point in the future when it becomes income.
~Tim~
Sat May 29, 2010 12:16 am
floyd New Poster
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taxes
pensions are they to be taxed ?
Thu Oct 20, 2016 8:51 pm
ken-do-nim Full Member
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(I didn't know you could draw Social Security as early as age 62. Learn something new every day!)
