if someone closes a 401 k and puts it in their savings do they still have to pay tax on that

Forum|Forum|4 years ago
February 22, 2022
17 replies
25 views

if someone closes a 401 k and transfers it to their savings do they still have to pay taxes on it

ProSeries Basic

This topic has been closed for replies.

rbynaker

Level 13

yes

Just-Lisa-Now-

Intuit Community Champion

Transfers it to savings, gambles it away at the casino, buries it in a hole in their backyard...all still taxable.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

qbteachmt

Level 15

Ask your client to provide their 1099-R for that activity. You will use this to enter the info for purposes of Tax on the distribution, and it might be subject to penalty, as well.

Don't yell at us; we're volunteers

J

jeffmcpa2010

Level 10

[Removed]

Just-Lisa-Now-

Intuit Community Champion

previous questions asked makes me think theyre either very green in the biz (and should find a mentor) or are preparing G'Ma or G'Pas return DIY style.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

IRonMaN

Level 15

This question fascinates me. Which part of the event stream is causing the confusion for you? Does the act of closing the account make you think it wasn't taxable or the fact that it was put into a savings account cause it to be nontaxable? I'm just curious. I'm guessing you don't prepare a lot of returns for retired folks?

Slava Ukraini!

joshuabarksatlcs

Level 9

@IRonMaN It was a trick question. I was surprised you didn't catch it . I guess your ACME advanced grammar certificate expired.

The answer is NO.

Question: if someone closes a 401 k and transfers it to their savings do they still have to pay taxes on it

Someone: A taxpayer, a person. SinguLAR.

Their savings: the savings account owned by a bunch of people.

Upon transfer, the taxpayer pays tax, unless rolled over in 60 days. Form 1099-R kicks in.

After the transfer THEY (the bunch of people) no longer have to pay tax on it - assuming it refers to the 401(k) account.

So, the answer is NO.

I come here for kudos and IRonMaN's jokes.

SensibleandHourly

Level 6

Generally, yes, unless by some miracle they are still in the sixty-day window in which case they could hustle up and move dollars back into a retirement account/IRA.

"You have 60 days from the date you receive an IRA or retirement plan distribution to roll it over to another plan or IRA. The IRS may waive the 60-day rollover requirement in certain situations if you missed the deadline because of circumstances beyond your control."

https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions