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QUESTION DETAIL
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I am retiring soon and would like to take my company supplied retirement in a lump sum. I have a separate 401k and know I can't access that money until I am 59.5 years without penalty. I don't believe the company retirement is the same as I can retire now and start recieving an annuity. I want to take the other option, lump sum. If there are no penalties. Is there a way that I can take it and have the tax liability spread over more than one year so I can lower the tax percentage I have to pay?
ANSWER
The BIDaWIZ Team's Answer:
If you are withdrawing a lump sum amount from your 401K, then you will owe taxes on the entire amount. You cannot spread the tax liability over two years. However, if you withdraw some of your 401k, then you will only be taxed on that amount and your adjusted gross income will not increase as much as if you did a lump sum withdrawal. Please note that tax rates are scheduled to rise in 2013.
