Personal experiences paying estimated tax on 401(k) withdrawalgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
1. Does anyone have any experience (they care to share) with payment of estimated tax on the early withdrawal of IRA/401(k) monies? 2. Is this something new that started in 1998? 3. And, is there any way to "delay" the payment of the estimated tax until next year (so that one doesn't get "hit" with the 10% early withdrawal penalty AND the estimated tax this year(?)
-- Albert E. Potts (Potts5116@aol.com), January 10, 1999
No it is not new. It was in the documentation you got. and no there isn't any way to stretch it. My other half just rolled one over to another plan and had to pay the tax, and teh tax on the tax. We'll get it back because we ponied up for the new IRA but we were NOT amused when we had to pay not only the penalty, but the tax on the amount of the penalty!!
-- Chuck, night driver (email@example.com), January 10, 1999.
This is one of the problems when you let the govt tell you what you can and can't do with your money. Sucks, doesn't it?
-- Bill (firstname.lastname@example.org), January 10, 1999.
Is the price you pay for getting the tax breaks Bill. And is why I don't do the 401K thing. Also, small offices often have rather 'odd' 401K investments - I have heard of art, rare coins, gold, even collectible cars! Might want to do some of that on my own, but not with 401K money where I have no direct control!
-- Paul Davis (email@example.com), January 11, 1999.
Paul, you are correct!
Although our 401-ks are doing great, I wish I would have taken control over that money instead.
-- Dave (firstname.lastname@example.org), January 11, 1999.
There's an old saying, "half of something is better than all of nothing." I'd rather pull out my 401(K), pay the taxes and penalty, and keep the rest than leave it in and end up with nothing when the bottom falls out.
-- Zoe (email@example.com), January 11, 1999.
Just how fearful should one be of banks and financial investments failing? I am in a quandry about what to do with an annuity I have. Should a person take the 10% penalty plus taxes on the interest and get it out or leave it and pray for the best. My husband says the banks etc. will not all fail. That my money is okay where it is. I don't think I believe in annuities anymore. To difficult to get at your money. If I take out this sizable amount of money what do I than do with it? Put it in the local bank? NOT?
-- maria (firstname.lastname@example.org), January 11, 1999.
Thanks to those who have offered answers. PERHAPS my quandry (like maria's, above) is that I'm looking for some certainty in an uncertain world and in a universe of uncertainty regarding Y2K. Wife and I have been preparing since we "got it" last February-- and we're still "getting it". . . At any rate, I agree that "half of something is better than all of nothing". I believe that the banks will fail and that our financial and economic system will "fail". IF I believe that, then why wait one more milisecond before pulling all $$ out? Still trying to get my non-geek brain around the whole thing. . . In response to maria's query (above)-- with my spouse I am perfectly willing to support her in not taking $$ out if she believes its perfectly OK where it is-- even though I believe electronic promises- to-pay will vanish. . . It's just a matter of supporting one's spouse "for better OR WORSE". . . When (and/or if) we take $$ out, we'll "store" its "purchasing power" in gold or silver (available at coin shops or on the 'net). In the meantime while we vacilate in slow-motion panic we'll continue to make preparations for TEO our world AWKI. . . Hope this helps you, maria.
-- Albert E. Potts (Potts5116@aol.com), January 12, 1999.
For a well-written explanation of banking and food for thought, check out Michael Hyatt's site. Read the section called your personal survival guide. It's a pre-release of his upcoming book on y2k preparedness. Read the chapter on money markets.
-- me (email@example.com), January 12, 1999.