Avoiding a higher tax bracket when withdrawing a 401k when retired.. How?
We got a problem boys..
Long story short, my wife, new baby daughter, and I need a place to live.. Nowhere to rent, decided we should buy. Just we would ride the line of paycheck to paycheck.. My amazing mother (retired) and I came up with a deal. She would buy us a house with cash from her 401k. Amazing right?
She wants all her money out of the bank and into something in her control, such as gold, real estate etc. REGARDLESS.
We just found out today, that withdrawing the money counts as income.. Withdrawing the lump sum would mean it would push her into a higher tax bracket, meaning she'd have to pay almost 40% of that to taxes!!!!! The banker told her she would have to withdraw $700k to get $400k in cash essentially. OUCH!!!!
I understand paying taxes on the 401k, but it pushing her into a higher tax bracket seems absurd.
Tell me there is a way around this, like sending the money to an offshore account, an LLC.. Or something. She's very very angry, and it's disgusting. She's worked 40 years as a nurse, to find out her money isn't even in her control. WTF.
We got a problem boys..
Long story short, my wife, new baby daughter, and I need a place to live.. Nowhere to rent, decided we should buy. Just we would ride the line of paycheck to paycheck.. My amazing mother (retired) and I came up with a deal. She would buy us a house with cash from her 401k. Amazing right?
She wants all her money out of the bank and into something in her control, such as gold, real estate etc. REGARDLESS.
We just found out today, that withdrawing the money counts as income.. Withdrawing the lump sum would mean it would push her into a higher tax bracket, meaning she'd have to pay almost 40% of that to taxes!!!!! The banker told her she would have to withdraw $700k to get $400k in cash essentially. OUCH!!!!
I understand paying taxes on the 401k, but it pushing her into a higher tax bracket seems absurd.
Tell me there is a way around this, like sending the money to an offshore account, an LLC.. Or something. She's very very angry, and it's disgusting. She's worked 40 years as a nurse, to find out her money isn't even in her control. WTF.
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