Bad Tax Idea: Not thinking about what happens when you cash out of an IRA or 401K early or fail to roll them over properly.

Bad Tax Idea: Not thinking about what happens when you cash out of an IRA or 401K early or fail to roll them over properly.

You may have been laid off and as one of the terms of employment; your employer sends you a letter and or the check from your 401K. Maybe you have been on hard times and need your money and you cash out your IRA. You will need to put aside at least a third of it for paying Fed and state taxes.

Take care of this immediately because more times than not, if you are financially strapped for cash, you may be in a worse situation several months down the line at tax time and you may have more penalties incurred for not having enough money withheld or paid quarterly.

Good Tax Idea: Putting aside and paying at least a third of your disbursement quarterly to the IRS and state taxing agencies to cover any tax liability incurred by cashing out your IRA or 401K.

Kim Greenblatt

One Response to “Bad Tax Idea: Not thinking about what happens when you cash out of an IRA or 401K early or fail to roll them over properly.”

  1. […] around for those receipts for your donations. Maybe times were tough and you had to cash out your 401k or IRA. Regardless of what is going on in your life, you should always have a pulse on your money and your […]

Leave a Reply

*