401K Qualified Plan or IRA for Early Distributions?
L1: 401K Qualified Plan or IRA for Early Distributions?Question about 401K (qualified) plans. Aside from the “rule of 55”, the substantially equal payments rules apply in these plans too. Am I correct? Assuming you don’t qualify for the early distributions, are they any tax advantages or disadvantages to rolling your qualified plan to an IRA?
Thanks for all the information shared here. It’s a great resource and much appreciated!2017-07-26 13:47, By: SOS, IP: [126.96.36.199]
L2: 401K Qualified Plan or IRA for Early Distributions?Read the post by Ms. Tessie, a case where she is starting a SEPP from a former 401k plan and having some issues. We recommend an IRA rollover for at least the balance you need to generate the amount of SEPP distributions you need, because you have more control over the IRA and fewer things can go wrong. That said, it is perfectly legal to set up your SEPP from the 401k account. On the other hand if you separated at 55 and your 401k plan provides flexible partial distributions (no lump sum requirement), you can avoid a SEPP plan altogether including the risks and rigidity of a SEPP plan. The taxes on SEPP distributions from either an IRA or 401k plan are the same.2017-07-26 16:35, By: Alan S, IP: [188.8.131.52]