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After tax contributions in 401k and SEPP

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Bytwpc

L1: After tax contributions in 401k and SEPPI’m 55 and was laid off 18 months ago. I have a 401k that I want to set up a SEPP for. The 401k has a small amount (about $6000) of after tax contributions that were made 20 years ago. The company has merged several times since then and no one seems to know how much the original after tax contributions were. The after tax balance on the statement includes matching contributions and interest. Should I try to withdraw the after tax money before setting up the SEPP?
What is he best way to handle this to avoid penalties and complex calculations?
Thanks for your help.
twpc2004-03-22 15:15, By: twpc, IP: [69.34.190.129]

L2: After tax contributions in 401k and SEPPHello twpc:
I would lean hard on the plan administrator (and potentially yourself) to get the right after-tax contribution amount first. Second, I would definitely withdraw the amount as it is a tax free transaction. Third, I would set up the SEPP plan on the remaining balance.
The records have to be available somewhere; otherwise the plan administrator will not know how to porperly complete a 1099R for you or anyone else.
TheBadger
wjstecker@wispertel.net
2004-03-22 15:38, By: TheBadger, IP: [38.116.134.130]

L2: After tax contributions in 401k and SEPPThanks for the quick reply, Badger!
Will there be a 10% penalty if Iwithdraw of the after tax money?
Thanks again….
twpc2004-03-22 16:14, By: twpc, IP: [65.40.207.232]

L2: After tax contributions in 401k and SEPPNot if you only withdraw the after tax dollars and no gain or pre-tax dollars.2004-03-22 16:19, By: Gfw, IP: [172.16.1.70]

L2: After tax contributions in 401k and SEPPI also have after-tax mixed with pre-tax in 401k and I have always been advised that any withdrawal is pro-rated according to the percentage of pre/after tax. Therefore it is not possible to make withdrawal of only after-tax principal. Could this restriction be only with my particular plan?2004-03-28 21:11, By: Jazz, IP: [205.188.116.213]

L2: After tax contributions in 401k and SEPPThis issue is a bit of a trap (door) as it can swing two ways:
(1) if you have after tax monies in your 401(k) and take a QLSD, by law the Plan must distribute all the funds per your direction which should include you directly receiving all of the a/t monies directly as a tax-free transaction & typically all the remainder going to an IRA.
(2) conversely, if all the funds stay in the plan & you start a SEPP plan from the 401(k) — which maybe what you want to do — then yes, the funds; a/t vs. p/t come out ratably.
Bottom line, you typically need tohave a real good reason to stay in the plan to give up the a/t distribution or the a/t monies need to be real insignificant.
TheBadger
2004-03-29 06:57, By: TheBadger, IP: [38.116.134.130]

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