Denne Posted January 24, 2008 Report Share Posted January 24, 2008 I have had this issue come up twice in the last few weeks. Both are employees of the same company. The one that called today has around a half million in his 401K account. He was advised by another employee that she is moving her 401K into a corporation....which is a business she just bought. She will use the money from her 401K instead of withdrawing it and paying tax and penalty on it. She will also be drawing a salary from the corporation....actually from her 401K. He said he looked a little further into it and now wants to do this. He said it should be something that I can set up for him....not really interested in that. I just don't want to do something, as the accountant and tax preparer, that isn't correct. He also asked me....of course I don't have the answer.....if he could form an LLC and still do the same thing and draw a salary too, if he makes it a partnership. Has anyone else had any experience with the sort of thing? Makes me a little nervous....sounds like a scam of some sort to me. What if the new company doesn't make it? When does the income from the original 401K get reported? Somehting just sounds wrong with this situation to me Thanks for your assistance! Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted January 24, 2008 Report Share Posted January 24, 2008 Run, don't walk, away from this one. taxbilly Quote Link to comment Share on other sites More sharing options...
lbbwest Posted January 24, 2008 Report Share Posted January 24, 2008 Run, don't walk, away from this one. taxbilly I agree with Taxbilly completely. There have been some seminars out there offering to set up various ways to "invest" retirement funds in various entities including real estate. The rules are very specific and are usually prohibitive regarding individuals' investments in non-publicly traded entities. It stemmed from the allowance of investments in retirement funds into REITs (Real Estate Investment Trusts) which are non traditional investments in terms of being on the NASDAQ etc. WARNING Will Robinson WARNING! lbb Quote Link to comment Share on other sites More sharing options...
joanmcq Posted January 25, 2008 Report Share Posted January 25, 2008 Can we say self dealing? NO NO NO! Can we say tax and penalties on a half million? Ouch! Quote Link to comment Share on other sites More sharing options...
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