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- Dec 4, 2002
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i'm posting this on the non-trad forum, because of the increased likelihood of someone having had this experience, or maybe just because i'm hoping there's a CPA-turned-Med Student around here somewhere.... Maybe the answers will help you guys with your finances thru medical school too.
In my former professional life, I contributed to a 401k. There isn't a lot in there... in fact, the account has just recovered to it's 1999 level of about $10K. I was thinking, that while i'm in medical school, and well below the poverty line, I should take that money out and put as much of it into a Roth as possible, and the rest into some other investment.
The point being, that I'd rather take the tax hit NOW (when i'm in a low/no tax bracket) than later, when I'm in a higher bracket.
I don't want to use the money, it's nice to know it's there for dire emergencies, but other than that, I have no plans on spending it. I'm just trying to take advantage of this current state of poverty.
So, to expound and recap...
1) Is there a mandatory tax percentage "penalty" for taking money out of a 401(k) before you're the right age?
2) If so, what is the percentage?
3) Is it a straight penalty, or would those taxes be included in the taxes you paid for the year... and if you had an income of $0, would it be fully refunded at the end of the year??
4) What's the current max/year for investing in a Roth? What about "catching up" if you haven't previously invested via a Roth IRA?
5) Any suggestions for doing something very hands-free, with the rest of the money (i'm not a day trader, i'm inclined to put money somewhere and let time and the stock market do it's thing... ie. I haven't changed my mutual fund designations since I chose them when I started the 401(k)... I've still got Janus 20 and a couple others).
6) Can I handle this myself, or do I need to hire someone to do it for me?
Thanks in advance, and best of luck!
Christine
In my former professional life, I contributed to a 401k. There isn't a lot in there... in fact, the account has just recovered to it's 1999 level of about $10K. I was thinking, that while i'm in medical school, and well below the poverty line, I should take that money out and put as much of it into a Roth as possible, and the rest into some other investment.
The point being, that I'd rather take the tax hit NOW (when i'm in a low/no tax bracket) than later, when I'm in a higher bracket.
I don't want to use the money, it's nice to know it's there for dire emergencies, but other than that, I have no plans on spending it. I'm just trying to take advantage of this current state of poverty.
So, to expound and recap...
1) Is there a mandatory tax percentage "penalty" for taking money out of a 401(k) before you're the right age?
2) If so, what is the percentage?
3) Is it a straight penalty, or would those taxes be included in the taxes you paid for the year... and if you had an income of $0, would it be fully refunded at the end of the year??
4) What's the current max/year for investing in a Roth? What about "catching up" if you haven't previously invested via a Roth IRA?
5) Any suggestions for doing something very hands-free, with the rest of the money (i'm not a day trader, i'm inclined to put money somewhere and let time and the stock market do it's thing... ie. I haven't changed my mutual fund designations since I chose them when I started the 401(k)... I've still got Janus 20 and a couple others).
6) Can I handle this myself, or do I need to hire someone to do it for me?
Thanks in advance, and best of luck!
Christine