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If you have money in an IRA it means the govt can tax it right?
b/c i quit a job and am going to get my 401k and dont know if i should bother putting it in an IRA or just put it in my checking account. I'm 23 and its really not that much money in the 401
2 Answers
- Anonymous1 decade agoFavorite Answer
If you take the money and run, you will owe income tax and a 10% penalty on the amount.
Alternately, you put it into an IRA and let it grow.
It may seem like a small amount now, but you'll need it when you retire.
Note, if you take a check, they will withhold 20% for taxes. To roll it over, you'd have to come up with the other 20% out of your pocket and make sure you don't miss the 60 day deadline. (You'd get the taxes back when you file next year.) I always do a trustee to trustee transfer.
- Wayne ZLv 71 decade ago
If you cash it out, you will pay taxes plus a 10% penalty.
If you roll it over in to an IRA, there are no taxes and no penalty.
