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My dad is 66, retired, and has around $75k in his 401k with ADP. He wants to pull $5k out of his account. ADP sent a form to fill out and I am helping him since he has some questions. On the form there are two sections A and B:

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I assume that I should I skip section A and go right to section B. I can click the first check box for a “partial distribution” and enter the distribution amount of $5k. I assume under “payment options” in section B that I should select the first box that says “pay me 100% of the Partial Distribution amount in a cash distribution“. Is this correct? I assume that 100% means 100% of the $5k that I entered.

I'm confused about the last section which asks about “money type election”. It gives me two choices: ”pre tax rollover” and ”after tax rollover”. I don't understand which one to pick or even if I have to select one at all (it says select money type below if desired when I check the box). Can anyone shed some light on what I need to select?

All I want to do is get $5k out of his 401k. I do not want to fill out this form incorrectly, delaying the withdrawal. Do I need to check a money type or just leave this empty? Has anyone ever filled something like this out? I assume he would get a check in the mail?

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You would choose the "cash distribution" (I am assuming he's wanting the cash and not rolling it to a different retirement account). The other options are to roll over the entire amount you entered, or to do a combination (roll some over, take some in cash)

The last two check boxes determine how much of that $5K will be considered income (and possible taxable). 401(k)s are almost always funded with "pre-tax" money and is taxable when it is withdrawn. They can be funded with "after-tax" funds, which means that the contribution is taxable at that time rather than deferred, and you do not pay tax on the growth either.

It is rare to have "after-tax" funds in a 401(k) (his quarterly statement would show if there are), so most likely all of it is "pre-tax" and you can either leave them blank or check the "pre-tax" box. Note that withdrawal of pre-tax funds will be added to his income when he files taxes and might increase your tax due. It might be worth talking to an accountant to see if you need to pay estimated taxes and avoid underpayment.

If he does have after-tax funds in the 401(k), then checking the "after-tax" box would save some money when he files taxes.

I assume he would get a check in the mail?

Do they have some sort of ACH option where he can enter a routing number and account number for direct deposit? That would be faster than a paper check. Otherwise, yes he would probably get a check in the mail.

  • His 401k is almost certainly not taxed when he had it it was pre tax dollars. Everything you said makes sense so do I just leave the money type unchecked?? – JonH Nov 4 at 14:37
  • @JonH If it's all pre-tax then it won't matter. If you leave it blank it will be proportional, meaning if 90% of the total balance is pre-tax and 10% is after-tax, they would count 90% of the withdrawal as pre-tax. So you could check pre-tax to be safe but it shouldn't matter. – D Stanley Nov 4 at 14:39
  • Thank you kindly people like you are just great – JonH Nov 4 at 14:49

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