One day recently, we made the same service call to two different 401(k) service centers for two different clients. Tom needed to use advanced planning techniques to save about $20,000 in taxes and penalties. Ann needed to complete a “typical” 401(k) rollover. Although her 401(k) was also eligible for advanced planning techniques, she didn’t need them. When we called Tom’s 401(k) service center, the gentleman did a great job assisting Tom and Tom was able to utilize the planning techniques. Ann’s servicer must have been tired, stressed, or told to keep his time on a call to a minimum. He said, “You have company stock in your plan, so you want to cash that out and roll it over as cash, right?” Here’s the rub. If Tom had spoken with this operator and accidently given the “obvious” answer to this question, he would have irrevocably incurred a $20,000 higher tax bill. How many times have you wondered about questions like this from your doctor or mechanic? A seemingly innocent question, answered wrong, could have cost Tom $20,000. That’s part of the value of a knowledgeable advisor who is also well-versed in tax laws watching out for you.
Neither Selah Financial Services nor Commonwealth Financial Network® provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation. This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.