Accounting

Tax question from an auditor...I started a new job and initiated a rollover of my 401k from old company to new company. The old TPA issued a check to my new TPA for benefit of me, however they (cont)

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You could just set your allocation to be 100% cash until you decide the market is down enough and reallocate to something else.

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You have to have a realized event to recognize income for tax purposes. If you don’t deposit it to the new plan within the time period, then your realized event is when you cashed out of the old plan and you have to include the payout as income. If you do deposit the check in the new plan within the allowed timeframe, you don’t have a realized event. The stock market could go up or down in the next 60 Days but those fluctuations will not give rise to any realizable event for you so there is nothing to report for income taxes.

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If the $ is in cash just deposit the check but don’t buy any investments. You realize you can sit on cash in a retirement or brokerage account right? They’re not going to invest your $ just cause you give them the check.

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Don't fuck around with the 60 day limit. When they sent you a check they sold all your shit and turned it into cash. If it's a Roth, your gains are tax free. If it's not, you pay income tax on what you take out

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Thanks EY! I plan to deposit it within the 60 day period, just wanted to ride this wave for a bit before I reinvest so that I can hang on to my money and not lose it in the market while it tanks. 😀

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Mailed me the check to forward to new TPA. Now that the stock market is tanking I’m going to sit on that check as long as possible before I hand it over to reinvest. I have 60 days. Are there any tax implications for the “unrealized gains” that are occurring since I’m not losing my shirt in the market right now since I’m holding a check?

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Very interesting question I’m an auditor and curious about this as well.

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Thanks for your help everyone! Definitely gonna mail it in ASAP and put it into some low risk investments for the time being.

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Mailing it in won’t invest it in anything. Just keep it as cash in the new account until you feel comfortable investing it.

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I do not think so. You can show that you transferred from one company to another. You have 60 days. The value is not changing. Your 401 was converted to cash. Under the regulations you are fine and also lucky. When you jump back in you will be doing so with the same amount, just better buying power.

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Timing the market... how will you know when it’s time to buy back in? The market has already self-corrected. I’d get back in now.

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Put it back in now. Basically the market is cheap... don’t wait for the market to come back before you invest back in stocks

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