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Tapping 401k

Discussion in 'Questions From New Drivers' started by JW430, Jul 27, 2009.

Page 3 of 5
  1. Jul 28, 2009 #21
    JW430

    JW430 Medium Load Member

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    May 23, 2009
    Rocklin, CA
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    So if I got you guys right I can roll over my 401k into an IRA tax free and then draw out of the IRA for schooling as necessary without being taxed?
     
    JW430, Jul 28, 2009
    JW430, Jul 28, 2009
    #21
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  3. Jul 28, 2009 #22
    Roadmedic

    Roadmedic Road Train Member

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    That is what is stated, but I would review Publication 970 at the irs website and make sure of the issues with the financial institution. Some do not like to participate.
     
    Roadmedic, Jul 28, 2009
    Roadmedic, Jul 28, 2009
    #22
  4. Jul 28, 2009 #23
    JW430

    JW430 Medium Load Member

    401
    37
    May 23, 2009
    Rocklin, CA
    0
    Ok I'll check it out, I definitely want to get off on the right foot financially =)
     
    JW430, Jul 28, 2009
    JW430, Jul 28, 2009
    #23
  5. Jul 28, 2009 #24
    JW430

    JW430 Medium Load Member

    401
    37
    May 23, 2009
    Rocklin, CA
    0
    From what I understand on Pub. 970 is that you can deduct work-related education as long as it does not qualify you for a new profession/trade. I would imagine that CDL training does not count since it is a requirement for this line of work.
     
    JW430, Jul 28, 2009
    JW430, Jul 28, 2009
    #24
  7. Jul 28, 2009 #25
    Roadmedic

    Roadmedic Road Train Member

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    Just click on this link, it will take you directly to the part that deals with your questions.

    http://www.irs.gov/publications/p970/ch09.html
     
    Roadmedic, Jul 28, 2009
    Roadmedic, Jul 28, 2009
    #25
  8. Jul 28, 2009 #26
    DsquareD

    DsquareD Road Train Member

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    NO. You will still pay regular income tax if any is due. It is only the 10% penalty that you can avoid if used for educational expenses.
     
    DsquareD, Jul 28, 2009
    DsquareD, Jul 28, 2009
    #26
  9. Jul 28, 2009 #27
    JW430

    JW430 Medium Load Member

    401
    37
    May 23, 2009
    Rocklin, CA
    0
    OK now I got it, hopefully I understand it correctly, lets say school costs $4000, I draw out $4500, $700 is taxable income, I owe 10% on the $500 I went over my school cost. Now would they charge income tax on that whole $700, the $200 I didn't pay 10% on, or $0 because the $500 I went over was already taxed?

    How many, roughly (ie 1/2, 3/10, etc.), driving schools are eligible? Are some company-run schools eligible?
     
    JW430, Jul 28, 2009
    JW430, Jul 28, 2009
    #27
  10. Jul 28, 2009 #28
    DsquareD

    DsquareD Road Train Member

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    This is also why I mentioned earlier about timing your withdrawals if it is near the end of the year. It would be best to make the withdrawals in a low income year. If you expect to make more in the following year, take it this year. If you expect to make less, take it in the next year.
     
    DsquareD, Jul 28, 2009
    DsquareD, Jul 28, 2009
    #28
  11. Jul 28, 2009 #29
    JW430

    JW430 Medium Load Member

    401
    37
    May 23, 2009
    Rocklin, CA
    0
    I will make more next year if I get into trucking at the end of this year
     
    JW430, Jul 28, 2009
    JW430, Jul 28, 2009
    #29
  12. Jul 28, 2009 #30
    DsquareD

    DsquareD Road Train Member

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    Green Bay, WI
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    You're catching on, but this is about the time you should let your tax preparer finish the job, as they will have a much better understanding of how to handle it correctly. This should be close enough for you to make a few decisions, the filing part is the fine tuning part where you may end up making up a few bucks either side of your estimate.
     
    DsquareD, Jul 28, 2009
    DsquareD, Jul 28, 2009
    #30
    JW430 Thanks this.
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