You should be able to avoid the 20% withholding by using a Rollover IRA. Tell them (the 401k custodian) you're not withdrawing, you're simply switching custodians from the 401k plan to a Rollover IRA. Each of these accounts can be a home for tax-deferred assets that will be withdrawn (and taxed) later in life.My former employer has been bought out by another company and is terminating my old 401k with the bulk of my retirement money. I have 90 days from 12/31 to roll it over.
Few months back I had opened a Roth IRA (ETrade) so I could contribute to my retirement in another way.
Looking at the rollover process there is mention of withholding 20% of my retirement amount, what the hec?
Is there a way to avoid this? Should I open a Traditional IRA and roll into that?
Etrade has something called a "Rollover IRA" will that avoid me being taxed?
Not sure what the best thing to do here is, not sure what kind of tax bracket I'll be in when I retire between SS, my Pension and me and my wife's retirement account.
Thanks in advance for your time and help!
If you like E*Trade, then you can stick with them. Every custodian offers a Rollover IRA (Fidelity, Vanguard, Schwab, etc.).
You shouldn't have to deal with paying any taxes until you withdraw the money from the Rollover IRA.
More detail here: https://www.bogleheads.org/wiki/401(k)#Rollovers
Regards,
Statistics: Posted by retired@50 — Thu Dec 19, 2024 12:36 pm