I have worked for the same bank for 15 years as a mortgage originator. Three years ago I elected to go on straight commissions (no base). My anticipation was to earn much more money than my than $30,000 annual salary. My focus was to be on new construction (very bad timing). I have been borrowing from credit cards and my 401-k program for over 2 years. The market has continually fallen and my commissions have been close to non-existent. My pay checks have been barely enough to cover my $700 monthly (payroll deducted) 401-1 payments on the amounts I have borrowed. I am 58 years old and on the verge of bankruptcy.

I have a substantial amount in my 401-k that I would like to withdraw to help me through my present dilemma. Does anyone know how this money can be withdrawn without penalty. My company has contributed nothing to this account. I have made no (tax free) contributions to this account for several years. My earnings are due to by choice of investments. I can understand having to pay tax on the liquidated amount but I feel that there must be some way to avoid paying a penalty to the IRS just because my account is labeled 401-K.

Any advise would be greatly appreciated.

Ken Harrison

Ken:

Sorry, but unless you retire from your job, any withdrawal will be taxed at your current tax rate PLUS the 10% Early Withdrawal Penalty.

There ARE exceptions to the 10% Early Withdrawal Penalty, but it involves paying higher education costs, medical bills, disability, etc. Bad luck on earning potential does not qualify.

As ATE points out, the hardship provisions of 401K plans are very stringent. The only way I see you qualifying is if you are facing foreclosure on your home. Anyway you can go back to salary plus commission?

Age 60 tax penalty 25k withdraw

What are the exception to 401k age 60 25k to avoid 10 % penalty

What are the exception to 401k age 60 25k to avoid 10 % penalty

What do you mean salary plus commission