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beanybb

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Topic: Tax Question
Posted: August/07/09 at 11:40am

I am buying a house, and had to cash out my 401k to do so. I followed the advise of the T.Rowe Price rep to roll it into an IRA to save $1k. My question is this, when I cash out the IRA, I am told I need to elect my tax with-holding amount in a percentage. Or elect to not with-hold taxes. I have no idea how much I should with hold or not. Does anyone have an answer for me? The TRowePrice people cannot give me any idea whatsoever. I am already stressed out by this whole thing, and now this! I would appreciate any help with this. Thank you in advance.

Anna

BeanyBaby
A 2005 BlackEye Purple Cabrio
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Anna

RevKibosh

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Posted: August/09/09 at 12:37pm

Generally 30% is a good rule of thumb, but I'm not sure on the rules for cashing out to buy a house. There may be some tax exemptions for that but you'd have to talk to an accountant.

In either case, you should be able to fill out a tax withholding form (W-4P) and make elections similar to your W-4 for regular income. You can use the instructions and worksheet on the W-4P to determine how many exemptions and such you should be electing. If in doubt, elect fewer exemptions. If you withhold too much in tax you'll get it back next April.

http://www.irs.gov/pub/irs-pdf/fw4p.pdf

Note: I am not a tax professional and the above should not be construed as professional tax advice. Please consult a CPA for professional advice.

2004 BRG MCS - Gone

--Grant and Kylee

johnf36

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Posted: August/09/09 at 3:22pm

Anna is this your first house? this doesn't relate to you tax question but s first time buyer question?

In regards to your question you might contact Hipcheck aka Mitch

Edited by johnf36 - August/09/09 at 3:23pm

If everything seems under control, you're just not going fast enough.

beanybb

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Posted: August/10/09 at 2:23pm

Thank you to you both for your responses. I ended up taking out 25%, and yes, I qualify for the first time home buyers credit. I have been told to put that into a CD and when tax time comes if I need it to pay additional taxes, I will have it. I do get some kind of exemption from some sort of penalty (really makes a lot of sense obviously!) for using it to buy a home, but I am not holding my breath, and already the mortgage guy wasn't real pleased with what I am getting out of it. Oh well! So hopefully we will close on or about September 1, and all will be well.

Thanks again for your help, and I will keep this all in a folder to remember at tax time as well!

BeanyBaby
A 2005 BlackEye Purple Cabrio
The better half of a two MINI family!
Anna

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Posted: August/10/09 at 11:24pm

Sounds like things are working out for you Anna. That's great to hear. Room for the horses at the new house?

beanybb

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Posted: August/11/09 at 2:02pm

Hi Kristen, thank you, yes it is going to be better in the long run. But the house is on a lot in town (Kittitas), and I am still seeking a place for the horses. I am thinking I may have to go door knocking to find one! I also need a place for the chickens, we are down (!) to 12 hens and a rooster. The rooster is a gentleman, was hatched here. Don't really want to break them all up, so trying to find a place here. This whole thing has been just so very stressful. I can't wait for it to be all over! I want to thank you again for your kindness in offering your place for the horses, but you are right, it is just too far away, and Rose is on a special diet, so I need to make sure she is okay. I will keep you all posted as to how this whole thing ends.

BeanyBaby
A 2005 BlackEye Purple Cabrio
The better half of a two MINI family!
Anna

Author	Message Topic Search Topic Options Post Reply Create New Topic Printable Version Translate Topic
beanybb Members Profile Send Private Message Find Members Posts Add to Buddy List MINI Motorer Joined: February/09/08 Location: Thorp Status: Offline Points: 392	Post Options Post Reply Quote beanybb Report Post Thanks(0) Quote Reply Topic: Tax Question Posted: August/07/09 at 11:40am
	I am buying a house, and had to cash out my 401k to do so. I followed the advise of the T.Rowe Price rep to roll it into an IRA to save $1k. My question is this, when I cash out the IRA, I am told I need to elect my tax with-holding amount in a percentage. Or elect to not with-hold taxes. I have no idea how much I should with hold or not. Does anyone have an answer for me? The TRowePrice people cannot give me any idea whatsoever. I am already stressed out by this whole thing, and now this! I would appreciate any help with this. Thank you in advance. Anna
	BeanyBaby A 2005 BlackEye Purple Cabrio The better half of a two MINI family! Anna

RevKibosh Members Profile Send Private Message Find Members Posts Add to Buddy List MINI Motorer PSMINI Nonmember Joined: August/14/04 Location: Ballard Status: Offline Points: 841	Post Options Post Reply Quote RevKibosh Report Post Thanks(0) Quote Reply Posted: August/09/09 at 12:37pm
	Generally 30% is a good rule of thumb, but I'm not sure on the rules for cashing out to buy a house. There may be some tax exemptions for that but you'd have to talk to an accountant. In either case, you should be able to fill out a tax withholding form (W-4P) and make elections similar to your W-4 for regular income. You can use the instructions and worksheet on the W-4P to determine how many exemptions and such you should be electing. If in doubt, elect fewer exemptions. If you withhold too much in tax you'll get it back next April. http://www.irs.gov/pub/irs-pdf/fw4p.pdf Note: I am not a tax professional and the above should not be construed as professional tax advice. Please consult a CPA for professional advice.
	2004 BRG MCS - Gone --Grant and Kylee

johnf36 Members Profile Send Private Message Find Members Posts Add to Buddy List PSMINI Expert Advisor PSMINI Member Joined: August/30/07 Location: Ephrata, Wa. Status: Offline Points: 8612	Post Options Post Reply Quote johnf36 Report Post Thanks(0) Quote Reply Posted: August/09/09 at 3:22pm
	Anna is this your first house? this doesn't relate to you tax question but s first time buyer question? In regards to your question you might contact Hipcheck aka Mitch Edited by johnf36 - August/09/09 at 3:23pm
	If everything seems under control, you're just not going fast enough.

beanybb Members Profile Send Private Message Find Members Posts Add to Buddy List MINI Motorer Joined: February/09/08 Location: Thorp Status: Offline Points: 392	Post Options Post Reply Quote beanybb Report Post Thanks(0) Quote Reply Posted: August/10/09 at 2:23pm
	Thank you to you both for your responses. I ended up taking out 25%, and yes, I qualify for the first time home buyers credit. I have been told to put that into a CD and when tax time comes if I need it to pay additional taxes, I will have it. I do get some kind of exemption from some sort of penalty (really makes a lot of sense obviously!) for using it to buy a home, but I am not holding my breath, and already the mortgage guy wasn't real pleased with what I am getting out of it. Oh well! So hopefully we will close on or about September 1, and all will be well. Thanks again for your help, and I will keep this all in a folder to remember at tax time as well!
	BeanyBaby A 2005 BlackEye Purple Cabrio The better half of a two MINI family! Anna

Kristin Members Profile Send Private Message Find Members Posts Add to Buddy List MINI Motorer Joined: November/10/04 Location: Roy, Washington Status: Offline Points: 1670	Post Options Post Reply Quote Kristin Report Post Thanks(0) Quote Reply Posted: August/10/09 at 11:24pm
	Sounds like things are working out for you Anna. That's great to hear. Room for the horses at the new house?

beanybb Members Profile Send Private Message Find Members Posts Add to Buddy List MINI Motorer Joined: February/09/08 Location: Thorp Status: Offline Points: 392	Post Options Post Reply Quote beanybb Report Post Thanks(0) Quote Reply Posted: August/11/09 at 2:02pm
	Hi Kristen, thank you, yes it is going to be better in the long run. But the house is on a lot in town (Kittitas), and I am still seeking a place for the horses. I am thinking I may have to go door knocking to find one! I also need a place for the chickens, we are down (!) to 12 hens and a rooster. The rooster is a gentleman, was hatched here. Don't really want to break them all up, so trying to find a place here. This whole thing has been just so very stressful. I can't wait for it to be all over! I want to thank you again for your kindness in offering your place for the horses, but you are right, it is just too far away, and Rose is on a special diet, so I need to make sure she is okay. I will keep you all posted as to how this whole thing ends.
	BeanyBaby A 2005 BlackEye Purple Cabrio The better half of a two MINI family! Anna