Is a Profit Sharing Rollover considered income |
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nemoryer
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Is a Profit Sharing Rollover considered income |
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I am anticipating receiving a sum from a former employer of a dissolving Profit Sharing Fund.
I am told by the administrator of this firm that if I elect to have the amount rolled over into an existing IRA or Rollover account (I have both), it is "NOT" considered income and will not affect the benefits I am receiving from the state as eligibility is based on income, the lower the better.
However, I am also informed that if I should elect a direct distribution, 20% is taken out upfront.
Further, if I elect to have it rolled over and decide at some later date to withdraw the amount from the rollover account/s, I am only taxed 10% because I am over 59-1/2.
Is the assumption that this is NOT considered income insofar as my state benefits are concerned, correct?
Thank you.
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Mon May 11, 2009 6:53 pm |
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No-Brainer
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It's not income until you get it in your hands, that's why a rollover is very beneficial if you don't have an immediate need for the cash.
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Mon May 11, 2009 9:24 pm |
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suraja
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By rolling over your pension and/or profit sharing plan assets to a Self-Directed Individual Retirement Account (IRA) or other qualified plan, you defer taxes until retirement or such time that you take a cash distribution from the IRA or qualified plan. A direct rollover distribution must be reported on Form 1099-R, which you will receive in January of the year following the year in which the distribution takes place. In Box 7 of Form 1099-R, the Distribution code will be a G for a rollover to an IRA or to your new employer's pension and/or profit sharing plan. This code means that no taxes are required to be withheld; however, the distribution must be reported on your Form 1040 for the year of the distribution.
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Fri Aug 07, 2009 2:12 am |
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Carmen W
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Wed Feb 13, 2019 7:26 am |
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Series7ExamTutor
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If you roll it into an IRA, there would be no current tax. When you decide to take distributions, it would be taxed at whatever your tax rate is at the time of of the distribution.
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Wed Mar 01, 2023 1:18 pm |
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