Question

401K Transfer

Forum|Forum|4 years ago
March 30, 2022
2 replies
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Can I transfer some of my 401K account to a trading account without it being taxed?

No.

A transfer of a 401(k) account to a Trading account is a distribution which is taxed (and subject to the 10% early withdrawal penalty if you are under 59 1/2).

You can do a rollover to a Traditional IRA (not taxed). And you can trade within that IRA.

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B

barb482Author

If I transfer shares of stock from my 401K or IRA to our cash account at tdameritrade is this a taxable event?

O

Opus 17

Employee

@barb482 wrote:

If I transfer shares of stock from my 401K or IRA to our cash account at tdameritrade is this a taxable event?

Yes, that is a withdrawal from the IRA or 401(k). You will pay regular income tax plus a 10% penalty if you are under age 59-1/2.

O

Opus 17

Employee

That depends on what you mean by "trading account."

If you don't like the options in your 401(k), you can roll over your investments to an IRA. (However, you must generally be separated from service. If you are still employed with the plan sponsor, you probably can't do a rollover.)

Once you have the funds inside an IRA, you can trade within that IRA. Some IRAs may allow trading of only certain types of assets, or may have other limitations, so verify with the IRA custodian that you can do the trades you want in their account. Most banks and brokers will offer IRAs, but they may set individual limits on what you can do inside the IRA.

As long as you keep your assets within the IRA, your gains are not taxed and your losses are not deductible. Whenever you withdraw money from the IRA, you pay tax at that time, plus a penalty if under age 59-1/2.