The Listen to Lawrence Letter: 401Ks and Gifting

If I withdraw $19,000 from my 401K and then gift it to one person, do I pay taxes on the amount withdrawn? Does my donee?

MY RESPONSE:

Any amount you withdraw from your IRA is income that is taxable to you. Gifts you make thereafter are not subject to income tax, by you or the recipient of the gift.

If you give a gift exceeding $19,000, you are supposed to report it but there is a tax you will pay only if your total lifetime gifts exceed about $14,000,000. The donee does not have any tax liability.

And, if anyone you know would like to

receive this Listen to Lawrence Letter just

tell them to send their email address to info@davidowlaw.com and I’ll add them to the list!

As always, please send your questions in! If you are thinking about it, others are probably too, so my answers will no doubt help you and many others.

Let’s stay connected. Stay safe!