Guest pete30075

Determination of the taxable portion of a 401K rolled over to an IRA

6 posts in this topic

Situation:

Husband retired and rolled his 401K to an IRA. The IRA contains around $450K. Now husband is getting divorced and is transferring half of money to wife as part of settlement. Wife needs to know what portion of the transferred IRA is taxable since the original 401K had a non-taxable and taxable portion. Husband is 68 and wife is 63. Husband says he does not have records of the 401K distribution/rollover.

Question:

How does one determine the taxable portion of a 401K rolled over to an IRA?

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Unless there was a mistake, the taxable portion rolled over was 100%. There may have been other (non-taxable) monies that were paid but not rolled over.

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Would the taxable portion still be 100% if the company contributed 3% and the Husband 6%?

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Ask the taxpayer for the 1099r issued when the rollover occurred, and it should show the amount rolled.

Then look at the account balance (if available) before the rollover.

If the IRA trustee did not take the after-tax money, then the rolled amount is all taxable.

If the IRA trustee did take the entire balance, then you only have recourse to the recordkeeper of the original account.

Edited by SoCalActuary

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When was the distribution rolled over to the IRA? Prior to 2002 after tax money could not be rolled over to an IRA.

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Would the taxable portion still be 100% if the company contributed 3% and the Husband 6%?

It appears that the 6% that you refer to are salary deferral amounts under a

401(k) provision. These were contributed pre-tax, so they would be taxable when withdrawn.

It also appears that the 3% that you refer to is an employer matching contributions. These amounts were not taxable to the participant when contributed, so they would be taxable when withdrawn.

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