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  #21  
Old 01-27-2006, 11:44 PM
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Originally Posted by Loner
I made the stupid mistake of putting after-tax dollars in my 401(k). A family situation arose and I opted to take out a loan. My plan didn't let you pay off early for at least a year. I wound up changing jobs and had my whole loan balance treated as a taxable distribution plus penalty. Even though half the dollars outstanding had been paid AFTER-tax, they do NOT make this distinction for loan proceeds. Grrrr....
Loner sounds like you got hosed by a stupid or lazy plan administrator. Even if they issued a taxable distribution for the loan offset they should have reported the taxable amount in box 2 of the 1099-R net of your after tax basis (the sum of all your after tax contributions - which should also be reported in box 5 (i think) on the 1099-r for the year you got the distrib. If it was less than 3 years ago you may be able to file an amended return though you may need to fight with your old plan to get them to correct the 1099 if it was wrong. BTW you could have rolled the loan offset to an IRA if you had the cash and you did it within 60 days of getting the distrib as long as the loan wasn't in default. PM me if you want go over specifics, I can't garantee anything but if it was big distrib it could be worth looking into.
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  #22  
Old 01-27-2006, 11:48 PM
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Originally Posted by violaactuary
For home buyers, the court noted one other restriction -- there is a $10,000 lifetime limitation on penalty-free withdrawals for this purpose.

I didn't know this, but then again, I work with qualified retirement plans, not individual retirement accounts. People always ask me questions about IRA's...

Good info!
You used to be able to avoid the 10% penalty by rolling a hardship to an ira and then taking it out from the ira (for some things like above) but the irs changed the rules and no longer lets you roll over a hardship. I used to tell this to people all the time but 9 out of 10 said it was too much work the would just pay the tax instead.
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Old 01-27-2006, 11:51 PM
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Originally Posted by Incredible Hulctuary
Bottom line: Don't put money into a retirement account if you think you'll need it before becoming 59 1/2 years old.

BTW, what exactly is a 1/2 year for this purpose? 183 days? 6 months?
I have to disagree on your 1st statement, especially with the pending demise of the DB and constant attacks on SS, it is more important thean ever to save for retirement. Too many people go after their ret $ just becuase they can, not because they really really need it.

On 2, the rule is 6 months after your 59th b-day.
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Old 01-28-2006, 05:42 AM
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Originally Posted by yankeetripper
I have to disagree on your 1st statement, especially with the pending demise of the DB and constant attacks on SS, it is more important thean ever to save for retirement.
A corollary to my statement is not to take any money out of the retirement account before 59 1/2. Anything that goes in there should stay in there until you're retiring.
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Last edited by Incredible Hulctuary; 01-28-2006 at 06:15 AM..
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  #25  
Old 01-28-2006, 04:49 PM
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Originally Posted by Incredible Hulctuary
A corollary to my statement is not to take any money out of the retirement account before 59 1/2. Anything that goes in there should stay in there until you're retiring.
I agree. People should be saving more, not to the point of living like a pauper but should not view ret $ as a easy fix for a new car, vacation or shoping spree. A freind of mine just said he is going to take $ out of his IRA to pay his outrageous $800 cell phone bill.
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Old 01-29-2006, 09:41 AM
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There has to be a happy medium. People who are up to their eyeballs in debt and can't pay their bills shouldn't be having $200 a paycheck coming out for 4K. They should be using that to pay off their bills! But on the other side of the coin, unless they change their habits, they will never be ready at a later point in live to start contributing. You have to be smart about it; generally speaking, this country is rotten with finances.

We're looking to buy or build a home this summer, and every once in a while I think about all that money in my 4k and wish I could add it to a home. I'm not devestatingly sorry about it, after all, whose to say if I would have had it at each paycheck I wouldn't have spent it... I also think that retirement money should stay in the retirement plan until retirement. Maybe only to prevent a foreclosure or bankruptcy would I change my mind about that... which goes back to what I was saying before. What are you doing putting hundreds of dollars away for retirement a month if you can't pay your bills!

Hmm, do you think I have had a couple of these situations cross my desk this week? Yep!
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  #27  
Old 01-29-2006, 09:41 AM
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Originally Posted by yankeetripper
A freind of mine just said he is going to take $ out of his IRA to pay his outrageous $800 cell phone bill.
That's just wrong...
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