Q. My wife quit her job years ago, but she hasn’t moved her 401(k) funds. Is this a problem? R.B., Nazareth, Pa.
A. Not from a tax perspective. In fact, if there are no concerns about accessibility to the account, she may be inclined to keep the cash right where it is if investment performance remains good and the fees are low or nonexistent. However, if other options are preferred, your spouse can roll over the funds tax-free to an IRA or another qualified plan where she now works. The rollover must be completed within 60 days.
Tip: Tax withholding of 20% on 401(k) transfers is generally mandatory. However, thanks to a favorable exception, no tax is withheld on trustee-to-trustee transfers.
- Small Business Tax Deduction Strategies No matches