Dispursment from 401k

5 Replies

Trying to understand something here. If I take a disbursement from my company plan 401k after retirement do I have to file a 1099 like I would if it was a solo401k? I guess what I am trying to ask is what is the difference between taking disbursement from the run of the mill 401k and a solo401k? I am getting a solo soon and just wanting to know what will happen in twenty years when I decide  to take payments from either type.

My broker is beside herself for me asking that question and sounds suspiciously like one of our presidential candidates on her answer. IOW, there was no answer at all.    

Talk to Dmitriy Fomichenko. He set up my Solo 401k. I use mine to investmin RE or anything I think will give me a better return on my money. I'm in charge on what I want to invest in.

@Mike Reynolds

Good question. Whether a solo 401k for a full-time employer 401k, the distribution rules are very similar and of course, taxes and 1099r still apply under both types of plans. 

Here is how the distribution rules generally work: 

Types of Solo 401k Contributions and Distribution Rules

  • After-Tax Contributions and Rollover Contributions. The solo 401k plan participant may withdraw at any time (after completing a distribution form), all or any portion of her account balance attributable to “rollover contributions” and/or “after-tax contributions.”
  • Employer Contributions: Employer contributions are subject to more stringent distribution rules and may be distributed upon the solo 401k participant’s severance from employment, death, or disability. In addition, employer contributions may be withdrawn upon the occurrence of any of the following events:

1) The occurrence of a Hardship,

2) The attainment of age 59 ½

3) The employer contributions being withdrawn have been accumulated in the solo 401k plan for at least 2 years; or

4) The participant has participated in the solo 401k plan for at least 5 years.

  • Salary Deferrals (employee contributions): Any employee contribution (including any earnings on such amounts) may not be distributed prior to the solo 401k participant’s severance from employment, death, or disability. However, the solo 401k plan permits an in-service distribution of such amounts upon attainment of age 59 ½ or upon a Hardship.

@Mark Nolan

Thanks Mark. Can you pm me because for some reason mine isn't working right now.

@Dennis Canon

Thanks Dennis. I will look into that. I have been planning on setting one up anyway but just had to wait until the exact circumstance with my employment happened.

@Mike Reynolds

The rules will be the same and a 1099 will need to be filed in both cases. The difference between the 401k your employer setup and a Solo 401k that you setup is likely going to be who is actually issues the 1099. Your employer probably has a 401k administrator that would handle those tasks while with a Solo 401k you will take care of that (with the help of your Solo 401k provider if they offer such assistance).

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