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401k early withdrawal
I need to cash out a 401k plan from a previous employer. When our company was purchased almost 2 years ago we were given the option to roll over into an IRA, cash out, or leave it. Those options are still open. I need to cash it out I have some things that I have to take care of and need the money. I just want to know how much that I am going to lose.
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Too much! First you will lose 10% in early withdrawal penalties. Next, the amount of the withdrawal will count as taxable income for the year. Depending on your tax bracket, it could push you into the next bracket, but in any case, you will pay federal and local taxes on the money.
The hit will likely be in the 40% range. |
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I agree with Scott. Cashing out ANY retirement account should be the action of LAST RESORT. The tax burden will be AT LEAST 10% (due to the Early Withdrawal Penalty), and may be as much as 50%, depending on your tax bracket and in which state you live.
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