401 k question

[RDANGELO]

I currently have money in a 401k. Does anyone know how I can get the money out before retirement?

[Hello_Kitty]

1. If it's with your company you might be able to borrow some of it.

But I think if you take it out there's a big tax penalty.

[democracyindanger]

2. Depends on the particular fine print

You'll definitely have to pay a huge tax on it, and some 401k's will only let you withdraw under certain circumstances, like medical bills or for the down payment of a house. Read your agreement.

[neebob]

3. Yeah, just take it out

and then pay the IRS 25 percent ... or more. I forget exactly how much it is, but it's at least 25.

[nedlogg]

4. I think you can

But there are some whopping penalties involved.

[gottalickbush]

5. Hi

Just get in touch with who ever has your 401k and tell them you want to withdraw some (or all) of it. You'll be hit with taxes and penalties on it though. You'll probably lose about half of it to taxes and penalties. Another option is to take a loan out against it. You pay the money back to you with interest.

[LaurenG]

6. 401-K

It depends on your company's plan. You can usually borrow against it for certain reasons listed above already. Also, normally if you quit or you are fired you can either roll the money into a differet plan or receive a distribution. You will receive 80% that will be taxed come April as income and 20% off the top for the gov.

[unblock]

7. talk to your 401k plan administrator

you'll have to pay taxes on it as if it were ordinary earned income in the year you withdraw it, so if you're in the 25% bracket, you'll have to fork over 25% to uncle sam. you'll have to pay state income taxes as well, if you have income taxes in your state.

on top of that, there's a 10% penalty for taking it out before retirement, with a few narrow exceptions. one possible exeption is that if the money becomes a down payment for the purchase of your primary residence, another is for certain medical bills. check with your plan administrator, as these have changed over the years and from plan to plan.

regardless of your actual tax bill, uncle sam will withhold 20% immediately. if that's too much or too little, you'll settle up next april 15.

finally, consider a loan instead of a withdraw, if your plan permits it. with a loan, you "withdraw" up to, say, 50% of the account, then pay back into the account, with interest, over the course of some number of years. this varies from plan to plan. the usual drawback is that you'll wind up paying taxes on the interest twice. but, this will be cheaper than paying the 10% penalty on the entire amount.

oh, and, i'm not an accountant of cpa or nothing so take it for what it's worth....