Need money from my 401k

ScottGem · Apr 16, 2006, 02:15 PM

You will pay a 10% penalty for early withdrawal. Plus the deferred income would be taxable in the year of withdrawal. I would only do this as a last resort.

A better alternative would be taking a loan against the 401K. Most plans have a loan provision and the interest rate charge is generally competitive. But the kicker is that interest goes back into you account. Basically you are borrowing the money from yourself and paying yourself back with interest.

So, the options are cash out, lose 10% of the value, plus get a big tax bill. Or take a loan and preserve the savings but increase them. I would go with the loan.

Talk to the plan administrator about what your options are.

fredg · Apr 17, 2006, 06:08 AM

HI,
I still have some money in my 401k plan. I had to withdraw some two years ago. I am 64 yrs old, and past the point where there was a 10% penalty.
I agree with the answer before mine, about calling your Plan Administrator; might be your Human Resources Manager.
Also ask if you are fully vested. If your company has been making contributions, you might not get that amount the company has added until you are fully vested.
But, you can still get what you yourself, have contributed.
There will also be at least a 20% amount withheld for taxes.
So, with the penalty and the taxes, you might only get a check for about 2/3 of what you have in the 401k. Your Plan Administrator can expain it.
I do wish you the best.

Need money from my 401k

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