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    kemasabe's Avatar
    kemasabe Posts: 5, Reputation: 1
    New Member
    		  
    #1

    Apr 17, 2007, 10:39 AM
    401 K and lose of job
    My husband thinks he may lose his job, we have two 401Ks with this company, one is from a previous company that was purchased by the company he now works for. He is unable to do anything with that 401K, except when he leaves the company, it has roughly $17000 in it, and the other has roughly $14000.
    He is 41 years and I am 40 years both accounts are in his name, he currently makes $94000 per year.

    Question: What kind of penalties are we looking at? Does the government and the present employer place penalties, or is it just state and federal. And what are they?

    I look forward to hearing from you, thanks in advance for your help.

    TX

    Ps we live in Massachusetts, if that makes any difference on the taxes... seems to always have some kind of crazy exceptions if you live in this God forsaken state.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Apr 20, 2007, 11:52 AM
    You will be subject to income taxes for both federal and Massachusetts at the marginal tax rate (about 25% for the federal return), PLUS a 10% Earl Withdawal Penalty.

    Do NOT do it unless you absolutely have to. At your tax rates, you will pay about 45 cents on every dollar withdrawn in taxes.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #3

    Apr 20, 2007, 12:54 PM
    Why do you think you are looking at ANY penalities. Some companies allow you to leave your 401K in their plan. If not, you can roll them over into an IRA.
    kemasabe's Avatar
    kemasabe Posts: 5, Reputation: 1
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    #4

    Apr 20, 2007, 01:23 PM
    I just made the assumption that if we took it out there would be penalties, but had no idea that they could be almost 50%.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
    		  
    #5

    Apr 20, 2007, 05:36 PM
    Yes, they could so either leave them or roll them over.
    kemasabe's Avatar
    kemasabe Posts: 5, Reputation: 1
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    #6

    Apr 20, 2007, 06:24 PM
    Thanks again, we will check into this with our company. I would much rather leave it alone. Kemah
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #7

    Apr 21, 2007, 06:04 AM
    Glad to help! Next time, believe your spouse! :-)
    kemasabe's Avatar
    kemasabe Posts: 5, Reputation: 1
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    #8

    Apr 21, 2007, 06:48 AM
    NOW you have gone TOO FAR... (just joking) Listen to my spouse, that will never happen.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #9

    Apr 21, 2007, 07:37 AM
    WHY does that sound familiar?
    kemasabe's Avatar
    kemasabe Posts: 5, Reputation: 1
    New Member
    		  
    #10

    Apr 21, 2007, 04:27 PM
    It's the unwritten law to defy your spouse... lol
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #11

    Apr 23, 2007, 01:14 PM
    Lmao!
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