Introduction
This is not a mystery novel. It is a book about how to take money out of your retirement plan. We are not promising that you will stay up all night breathlessly turning each page to see what happens next. Nonetheless, you will find this book useful -- perhaps even surprising.
Let's start with the basics. There are many kinds of retirement plans and many possible sources for owning one. You might have a retirement plan at work, an IRA that you set up yourself, or a plan or IRA you've inherited. Or you might have all three. You might still be contributing to a plan, or you may be retired. No matter what your situation, you will find information in this book to help you through the minefield of rules.
There are many reasons to take money out of a retirement plan. You might want to borrow the money for an emergency and pay it back -- or not pay it back. Maybe you quit your job and you want to take your share of the company's plan. Perhaps you're required by law to withdraw some of your retirement funds because you've reached a certain age.
Whatever your situation, you probably have a lot of questions about your plan -- and how to take money out of it. This book can answer:
- How do I know what kind of retirement plan I have? (See Chapter 1.)
- Do I have to wait until I retire to get money out of my plan or my IRA? (See Chapter 3.)
- Can I borrow money from my 401(k) plan to buy a house? (See Chapters 3, 4, and 5.)
- What should I do with my retirement plan when I leave my company or retire? (See Chapter 2.)
- When do I have to start taking money out of my IRA? (See Chapter 5.)
- How do I calculate how much I have to take? (See Chapter 6.)
- Can I take more than the required amount? (See Chapter 6.)
- What happens to my retirement plan when I die? (See Chapters 7 and 8.)
- Can my spouse roll over my IRA when I die? (See Chapters 7 and 8.)
- What about my children? Can they put my IRA in their names after I die? Do they have to take all the money out of the account right away? (See Chapters 7 and 8.)
- If I inherit a retirement plan, can I add my own money to it? Can I save it for my own children, if I don't need the money? (See Chapters 7 and 8.)
- Am I allowed to set up a Roth IRA? Should I? (See Chapter 9.)
- Can I convert my regular IRA to a Roth IRA? Should I? (See Chapter 9.)
- How is a Roth 401(k) plan different from a Roth IRA? (See Chapter 10.)
To help you answer these and other questions, we include many examples. They guide you through the decision-making process and take you through calculations. You will also find sample tax forms that the IRS requires, along with instructions for how to complete them.
This book contains tables to help you calculate distributions. It also contains sample letters and worksheets you can use to communicate with the IRS or with the custodian of your IRA or retirement plan. We've even included some important IRS notices so you can read firsthand how IRS personnel are thinking about certain critical issues.
The tax rules for pensions, IRAs, 401(k)s, and other types of retirement plans are notoriously complex, which can be all the more frustrating because they are important to so many people. The good news is that help is here: This book makes the rules clear and accessible.
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