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    bridget1's Avatar
    bridget1 Posts: 3, Reputation: 1
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    #1

    Sep 6, 2006, 09:38 AM
    401K early withdrawl
    I am in a 401K plan at my work and have been advised our company does not have it where you can get a loan. I need to make withdrawl funds from my 401k to handle some legal fees for a custody battle. Can I just and pay a penalty?
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #2

    Sep 6, 2006, 10:32 AM
    If you have to withdraw funds, you need to pay a 10% penalty of the amount withdrawn. In addition, the amount will also be included as part of your taxable income for the year. Generally 20% will be withheld to be used against your tax liability.
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    bridget1 Posts: 3, Reputation: 1
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    #3

    Sep 6, 2006, 10:35 AM
    That is what I thought but I was advised since I am an active employee I can withdrawl money from my 401k. I am vested and have 20,000 int the 401k now, only wanting to take a portion. Thanks Bridget
    bridget1's Avatar
    bridget1 Posts: 3, Reputation: 1
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    #4

    Sep 6, 2006, 10:36 AM
    Oops should have been cannot withdrawl funds from my 401k (being an active employee) is this correct?
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #5

    Sep 6, 2006, 10:52 AM
    That is generally not correct. Unless your plan has a specific provision against in service withdrawals which I believe is illegal. Withdrawing from a 401K is highly discouraged, but it can be done with penalites.

    It might be that you can't withdraw just a portion. Its possible the plan prohibits any but a full withdrawal. But I doubt that.
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