Ask Experts Questions for FREE Help !
Ask
    TMoore's Avatar
    TMoore Posts: 1, Reputation: 1
    New Member
     
    #1

    Feb 16, 2005, 07:32 PM
    Cashing out 401k
    I have recently quit working and am considering cashing in my 401k. Approx how much will I loose compared to rolling it over into a ira and then cashing that in?
    Greeko's Avatar
    Greeko Posts: 1, Reputation: 1
    New Member
     
    #2

    Feb 22, 2005, 10:27 AM
    Reply to Posting
    undefinedFont=Times New Roman

    Hi,

    I hope this message doesn't get to you too late. Quick questions would be how old are you? Also, what other investments do you have to supplement your income?
    ladyandjan's Avatar
    ladyandjan Posts: 191, Reputation: 4
    Junior Member
     
    #3

    Feb 28, 2005, 10:49 PM
    Are you at retirement age? If you are then why not just draw money from the 401k instead of cashing it in? There is a 10% penalty that is assessed along with other fees. Check with the company that setup the 401k at your company and ask them the details as to what it would cost to just cash it in. That's what they are there for to answer your questions-I'm surprised you didn't ask you employer these things before you left. I also believe there is a law that the company you have your 401k can hold it for you for a certain amount of time. I'd check on that also.
    thetachi464's Avatar
    thetachi464 Posts: 93, Reputation: 4
    Junior Member
     
    #4

    Feb 28, 2005, 11:50 PM
    401k
    When I quit my last job I waited to long to roll over my 401k and I lost 20% when they sent me the check but I can get that back on my taxes next year. This will make a huge difference if you have a rather large amount in your 401k. This is something that would take a lot of thought.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,818, Reputation: 846
    Senior Tax Expert
     
    #5

    Mar 1, 2005, 07:57 AM
    TMoore:

    If you are at or past the age of 59.5, then you can draw on your 401K and pay no 10% penalty. You will, however, pay income taxes on the distribution.

    If you are below the age of 59.5, then it would be best to roll the money over into a rollover IRA. The best (and In my opinion the only) way to handle that is to do a custodian-to-custodian transfer. Contact any bank/mutual fund/brokerage house and ask them for the paperwork to do such a custodian-to-custodian transfer, then take it to the 401K manager, and they will handle it for you. That way, nothing will be withheld for income taxes. If you have the 401K manager distribute the money to you, by law they have to withhold 20% for income tax purposes, which you have to make up out-of-pocket when you roll it over into the IRA yourself. The custodian-to-custodian transfer is cleaner and simpler. As to where to roll the money over to, that depends on your age, risk tolerance, marital/children situation and a host of other factors too involved to discuss at this point.

    If you are below the age of 59.5 and you have to have the money, you can avoid the 10% penalty by taking the distribution in a series of roughly equal amounts over a period of years. The 401K manager should be able to advise you as to how many years you have to spread over the distribution.

    Hope this helps!

    Atlanta Tax Expert
    Gerri Skinner's Avatar
    Gerri Skinner Posts: 2, Reputation: 1
    New Member
     
    #6

    Sep 10, 2009, 08:01 PM
    Quote Originally Posted by Greeko View Post
    undefinedFont=Times New Roman

    Hi,

    I hope this message doesn't get to you too late. Quick questions would be how old are you? Also, what other investments do you have to supplement your income?
    My daughter is 21.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Cashing out a 401k with a loan [ 1 Answers ]

I currently have a loan I am paying back to my 401k and am thinking about cashing out, but I'm not sure if this is possible or not. This might not be a good idea because I'm guessing the loan would be considered part of that cash out, which means I'd be paying taxes on money I won't even be seeing...

Cashing in 401k [ 3 Answers ]

I have major amounts of debt. I am currently looking towards relocation. My question is.. If I cash out my 401k what is the penalty? Do I pay taxes on it upfront or at the end of the year? I declared bankrupcty once and unable to do it again. Lately this seems like me only other option. Any info...

Cashing out 401k [ 1 Answers ]

I am moving to Australia from the US next year and wish to cash out my 401k. What penalties would I pay. I am not retirement age.

Cashing out 401K [ 1 Answers ]

I am 49 yrs old with a 401k sitting in a previous employers plan (about $70k) and thinking about cashing out to eliminate the debt that I have ($30K from consolidation). I don't see any other way to get out from under it. I know the consequences of doing it; penalty, taxes, lost future income....

Cashing in 401k penalty [ 0 Answers ]

In 2002 I cashed in a 401k and received about 14,000. I knew about the taxes but didn't know for sure I would receive a penalty because everything I read said I "may" and I figured they would let me know... anyway, I owed the IRS 1,800 and they put me on a pmt plan of $25 to federal IRS every month...


View more questions Search