<p>Hello,
If a person loses his/her job and has to do a 401K rollover within 60 days to an IRA account, does that require them to have to file a 1040 tax form instead of a 1040A tax form? Does distribution of 401 K’s have anything to do with which tax form you fill out, or involve taxes at all? I know that if you are laid off or fired you have to take your 401k with you. You can take it as cash, or pay the taxes on it and then roll it over into an IRA, I think?<br>
This question has to do with the fafsa and whether you are eligible to file a tax form 1040A.
Thank you clbmom</p>
<p>If you do a qualified rollover of a 401K to a rollover IRA, no tax forms need to be filed, and there’s no effect on FAFSA.</p>
<p>edited to add: make sure it’s a qualified rollover; the financial institution that will hold your new IRA will help you with this so that the money goes directly from the 401k to the IRA. Don’t risk making this a taxable/penalty transaction, it’s not worth it.</p>
<p>Thank you. What is a qualified rollover of a 401K? What is a rollover IRA? My husband is worried about losing his job at times.</p>
<p>You’re already on the right track when you said you want to do the rollover within 60 days. A rollover IRA is like any other IRA, but it’s set up by your financial institution to receive 401k funds. In some cases you’ll need to keep taxable and non-taxable IRA funds separate, so a rollover IRA is a way to ensure that your non-taxable contributions (that were originally from a 401k) are kept separate for accounting purposes. Talk to your financial institution to see how they usually handle 401k rollovers.</p>
<p>Here’s more information:</p>
<p>
</p>
<p>Oh, So the financial institution will make sure that they do the financial transaction so the person holding the 401K will not make errors. </p>
<p>Then I think you have to pay the taxes on it to someone and then you get the taxes back, if you make the 60 day deadline. I just want to make sure that I don’t end up having to file a 1040 tax form next year as opposed to a 1040A, because I overlooked something. </p>
<p>So the definition of a “qualified rollover” is that it goes directly into an IRA from the 401K. </p>
<p>Is the definition of a qualified IRA, (one that you don’t have to report on tax forms) a plain IRA and not a Roth IRA??</p>
<p>I know you don’t receive any income from the rollover, but I think you pay taxes on it, then get the taxes back once it is successfully rolled over. So I thought that might have to be entered on the 1040 or 1040A tax form. Thank you.</p>
<p>oh, So the money from the 401k rolled over into an IRA, maintains a status of being non-taxable, thereby not having to be filed on either a 1040A or 1040 tax form. </p>
<p>Is that right? </p>
<p>I read or heard somewhere that you have to pay the taxes on the 401k in order to not incur taxes on the 401k, and then the tax money you paid is refunded to your new IRA account, once the government is assured that the 401K went into an IRA account. </p>
<p>I read it is a good thing to have the money available to pay those taxes, and then you get it back once the IRA is set up. So that is what led me to think it somehow might have to go on a 1040A or 1040 tax form.</p>
<p>Don’t pay taxes on your 401k when you roll it over!</p>
<p>Sorry to shout, but that’s the whole point of doing the rollover within the 60-day window and not touching the funds at all; instead, have the funds go directly from the 401k to your new IRA. You will not have to pay any taxes or penalties if you do the rollover this way, and there will be nothing to file on your 1040 since you’re not actually taking possession of the cash prior to its redeposit into an IRA.</p>
<p>
</p>
<p>[Rolling</a> your 401(k) Trustee to Trustee Direct Rollover, Modified Adjusted Gross Income (MAGI) Income Limits for Deductible Contributions to a Traditional IRA](<a href=“bestgoldiracompany.com - bestgoldiracompany Resources and Information.”>http://www.research401krollover.com/direct-401k-rollover.html)</p>
<p>Whether your convert your 401k into a traditional IRA or a Roth IRA is a different matter entirely. Roth IRAs are funded with post-tax contributions; your 401k was funded with pre-tax contributions. It may or may not make sense to convert to a Roth IRA. The most conservative plan would be to roll the 401k funds into an IRA, then make the determination of whether or not doing a Roth conversion makes sense.</p>
<p>
That is not true. If you roll a 401-K to an IRA, the company where you had the 401-K will issue a 1099-R with a distribution code of G (rollover). It will need to be reported on your income tax return, but no tax will be due. The safest method is a trustee to trustee transfer where it never touches your hands. Just goes from one account to another. No taxes are withheld and nothing is owed, but still must be reported.</p>
<p>If by some chance, you take the money and deposit it in an IRA within the time limit, make sure that if there was withholding, that the withholding amount is also deposited, or it will be considered a taxable distribution.</p>
<p>Do the trustee to trustee rollover where you never get a check, and you’ll be a whole lot safer. The IRS is not at all flexible with the time allowed – even if you get run over by a truck and end up in a coma in the hospital. </p>
<p>Fidelity (And probably Vanguard or Schwab) will handle it all for you if you open an account with them.</p>
<p>Yes, I stand corrected (my rollover was such a long time ago I forgot about the IRS reporting). Here’s the scoop:</p>
<p>
</p>
<p>[Tax</a> tip: Reporting 401(k) and IRA rollovers](<a href=“http://www.bankrate.com/finance/money-guides/reporting-ira-rollovers-1.aspx]Tax”>Taxes Resources | Bankrate.com)</p>
<p>To the OP: please please don’t take the cash as a distribution, but instead do a trustee-to-trustee transfer. Have I and the other posters mentioned that you shouldn’t take a cash distribution from a 401k? Ok, 'nuff said ;)</p>
<p>It looks like the OP was just asking a theoretical question based on the possibility of her husband losing his job, but the information here applies to anyone changing jobs with a 401k.</p>
<p>Thank you all so much for your great advice and for replying to my post. I am so glad I can fill out a 1040A tax form. So my husband would get his employer to hold off writing the check until my husband decides which IRA he wants. (60 days) Then a trustee to trustee transaction could take place with out having to have the taxes due to add to the IRA account? Then it would be reported on the 1040A but no taxes would be owed. </p>
<p>So what I heard about having the tax money on the 401 K available is only if you take the money before you deposit it into the IRA. Then you have to deposit the tax money Into the IRA. But if you do a trustee to trustee transaction you don’t need to deposit any extra (?tax money that would be owed if took a personal check) into the newly formed IRA. </p>
<p>Is there any time a 401K distribution would require filling out a 1040 form, and not a 1040A form. I definately want to fill out a 1040A form for FAFSA purposes.</p>
<p>Oh so the tax money you would of owed if you had taken a cash distribution has to be added to the IRA, unless you do a trustee to trustee transaction. </p>
<p>So the 60 day limit I heard of was only regarding the government to allow you to put the taxes that would be owed if you took a cash distribution into a IRA, so you didn’t lose the money. </p>
<p>But if you do a trustee to trustee transaction, you don’t have to pay taxes, or put the equivalent of the taxes owed, if you took a cash distribution, into the IRA. </p>
<p>Is that it?</p>
<p>
</p>
<p>Yes, that’s it. This is why we’re telling you not to pay taxes. Much easier to just do a trustee-to-trustee transfer. No need to give the government the use of your money during this time.</p>
<p>One more reply. Thank you all so much for the 401K help. I really didn’t know anything about it, and my husband has never considered his 401K, as I try to do the finances. </p>
<p>So, what I learned from the 401k links you sent. </p>
<p>My husband’s employer has to let him keep his 401 k 403(b) plan at his place of employment if he has over $5,000 and has not reached 65 yrs. And he wouldn’t have to contribute the %20 withheld into a new IRA, but would get it back from the irs if he had the %20 and contributed it to the new IRA. </p>
<p>So, I quess his employer can not force a quick decision on him as to where to put his 401k 403b money if he is fired or laid off. Thank you</p>
<p>Oh, So they can’t force my husband to take his 401k money right away, before he knows where he wants to invest it!!! Thank you.</p>