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

[sgr1]

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

[rbynaker]

yes

[Just-Lisa-Now-]

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

[qbteachmt]

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.

[jeffmcpa2010]

[Removed]

[IRonMaN]

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?

[Just-Lisa-Now-]

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.

[SensibleandHourly]

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-...

[sgr1]

WOW

[joshuabarksatlcs]

@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.

[sgr1]

I ACTUALLY HAVE A 500 CLIENT TAX BUSINESS, BUT SOMETIMES IM JUST NOT SURE OR MAYBE

HAVE A MOMENTARY BRAIN LAPSE !  MY FATHER WHO HAS PREPARED TAXES FOR 55 YEARS,

PASSED AWAY IN AUGUST, I HAVE BEEN WORKING FOR HIM FOR 15 YEARS AND HE HAS ALWAYS

TOLD ME THAT NOT ASKING IS STUPID, BECAUSE THERE ARE NO STUPID QUESTIONS, AND TO MAKE SOMEONE FEEL STUPID FOR ASKING ANY QUESTION IS IGNORANT.  I AM SO THANK-FUL THAT WE HAVE SOMEONE IN THE TAX BUSINESS THAT KNOWS IT ALL!  AND I HOPE THAT

YOUR BUSINESS WILL FLOURISH AS RAPIDLY AS MY FATHERS HAS!  MANY CLIENTS LOVE

THE FACT THAT WE DO NOT TRY AND ANSWER QUESTIONS WE ARE NOT AWARE OF  .  WE ACTUALLY DO RESEARCH AND FIND OUT IF WE DONT KNOW.  I AM VERY SAD

THAT I DONT  HAVE MY FATHER TO ASK THESE STUPID QUESTIONS TO, I MISS HIM DAILY.

AND FROM HERE ON OUT I WILL NO LONGER ASK THE COMMUNITY THAT,  I THOUGHT 

WERE SUPPOSE TO BE HERE TO HELP ONE ANOTHER NOT TO BE MADE TO FEEL STUPID.

I WILL DO MY RESEARCH ON MY OWN FROM NOW ON. BUT THANK YOU FOR ANSWERING MY

QUESTION I GREATLY APPRECIATE IT.  I DO BELIEVE I SAID THANK YOU FOR ANSWERING MY

LAST QUESTION. AND AGAIN, I AM SURE YOUR BUSINESS WILL CONTINUE TO GROW SINCE

YOU KNOW ALL THERE IS TO KNOW ABOUT EVERYTHING, PEOPLE WILL BE VERY LUCKY TO

HAVE YOU FOR A TAX PREPARER!  

AS FAR AS THE COMMENT THAT YOU CALL YOURSELF A TAX PREPARER BY HAVING TO ASK

SUCH A STUPID QUESTION I HAVE NO WORDS!

[IRonMaN]

"YOU KNOW ALL THERE IS TO KNOW ABOUT EVERYTHING"

Maybe not everything, but I do know how to work my caps lock key.  I know a lot of other folks don't know how it works.

[sgr1]

THANK YOU FOR ANSWERING ME I GREATLY APPRECIATE THE FACT THAT YOU DID NOT MAKE

ME FEEL STUPID!

[sgr1]

WOW YOU ANSWERED SO QUICKLY MUST NOT BE TO BUSY, AND AGAIN THANK YOU FOR THE

STUPID QUESTIONS YOU ANSWERED. AND I JUST HAPPEN TO LIKE THE WAY THE LETTERS

LOOK ALL IN CAPS, BUT WHO KNEW! LOL

[IRonMaN]

Well, I guess we can't all be as busy as you with those 500 clients.

[qbteachmt]

"AND I JUST HAPPEN TO LIKE THE WAY THE LETTERS

LOOK ALL IN CAPS,"

As long as you know this is considered SHOUTING to others that try to read it, and that All Caps can be hard for those with vision issues to differentiate the characters, sure, keep asking in All Caps. Otherwise, you might rethink that concept.

After all, if you wanted others to be kind to you, why would you be rude the them right off the start by using all caps?

You should be taking continuing ed and keeping up on the tax regulations and you should be using your resources to see if the answers you seek are available to you (and will be timely and applicable). You ask peer users when you can't find the answer, are not sure how it applies, and don't really know how the program works, so that you can apply what you already solved.

[abctax55]

@sgr1 

No one owes you answers.  And asking (basic) tax questions on a public forum is NOT research, btw.  

[SensibleandHourly]

You are welcome.