Taking money out of a non qualified retirement plan?
Sunday, September 20th, 2009 at
3:09 pm
Jamie G asked:
I have a non qualified retirement plan ( this is not a 401K) through work.
Do I have to wait until I am 59 1/2 years old to take it out without paying tax or do I still have to pay tax. If I have to pay any tax, what is the amount or percentage.
I have a non qualified retirement plan ( this is not a 401K) through work.
Do I have to wait until I am 59 1/2 years old to take it out without paying tax or do I still have to pay tax. If I have to pay any tax, what is the amount or percentage.
Tagged with: 401k • Money • Paying Tax
Filed under: Retirement
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There would be tax on contributions or gain not previously taxed. It would be added on top of your regular income, so it would be taxed at your marginal tax rate. To get an approximate idea see,,id=164272,00.html
To get a closer idea, redo your 2008 taxes on downloaded forms with the additional income added in, and check the difference between “total tax” on that and your actual 2008 taxes.
First define a retirement plan.
A Qualified retirement plan is free of tax on the contributions.
Withdrawals are penalized and taxed.
I would consider a Non-Qualified plan as one where contributions are made after tax is paid on the amounts. Withdrawals are not taxable.
Such as savings, CDs.
Early Redemption of CDs are subject to interest penalties, reductions.
Corporate Bonds, Which cannot be withdrawn, can be sold.
If sold for a profit, gains are taxed. LOL, do you know any?
Interest is taxable. The par amount, when redeemed are not taxable since the original purchase price was already taxed.
Without knowing the kind of plan of which you speak, I can’t answer. The tax explanations above may be the answer.
Taxable withdrawals are added to your current income and taxed accordingly.
if you are still employed then you can no longer take a withdrawal of non-qual monies. I’m assuming that your employer is in danger of going under and you’re trying to get some of the money in there. The Jobs act of 2004 pretty much limited distributions to the following reasons:
The earlier of:
???? Separation from service with the employer and all members of the controlled group (and
in the case of a “key employee” no earlier than six months after separation from service)
???? The onset of disability
???? Arrival of a time specified under the plan as the deferral date (including a fixed payment
schedule)
???? Unforeseeable emergency
???? A change of control (to be defined in the regulations).
Unfortunately distribution upon a decline in the financial health of a company is strictly prohibited by ERISA.