On this week’s segment of Better Money Atlanta, Joel Johnson, CFP® answers commonly asked questions about 401(k)s. Learn about taxes on 401(k)s, rolling your 401(k) over into a different account, and more on this WSB-TV episode.
When receiving 401(k) money as a beneficiary, you pay taxes as if you earned it, and it may push you into a higher tax bracket.
Large tax penalties may come in to play when it is time to start withdrawing the money. For example, if you need to spend $500,000, you might need to take out about $800,000 because of the amount of taxes you’ll pay.
A 401(k) can remain untouched for as long as you wish. Proceed with caution and be aware of expenses or fees before moving any money out, as it will be taxed as ordinary income and may put you in that higher tax bracket.
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