Taking money from 401k

[qbkilla]

At my job i got a promotion and took a close look at my pay stub to see just how much more per check i am making. I then noticed they are taking 4% out for my retirement. I quicky had that chanced because I am not in a financial situation where I can afford to give up that percentage each month for retirement which is a long way a way (i am 30).

I called and they said I have 1.5 k about in my fund, and that I can only take it out for the following reasons (unless i were to leave the company, which I am not).

prevent eviction/forclosure
purchase residence
college
medial and dental bills
damage to home from natural disaster
burial of a family member

they said i can't even take it to pay rent, or buy a car.

is there any way around that, or is that money really froze until i leave the company or retire? they said i can take a loan of it, but lol, who wants to take a loan of their own money? that just sounds stupid, and im 500 dollars short of being allowed to do that anyway.

 

[Deleted member 121863]

sure you can cash out the whole $1,500... It will be added to your ordinary income and fully taxable (it is pre-tax $ and uncle still wants his cut), AND you will be charged a 15% penalty for early withdrawal, this penalty applies any time before you are 59 1/2 years old, unless you meet one of the other qualifiers. Move it to cash (the mkt is way to frothy) and leave it there, you got a start. If you leave that employer you would wanna roll it into an IRA, which can be set up at e-trade, schwab, etc. You could roll it (transfer) to the next companies 401k but they will have less investment options and higher cost than an IRA.

 

[Dr_Bob]

sure you can cash out the whole $1,500... It will be added to your ordinary income and fully taxable (it is pre-tax $ and uncle still wants his cut), AND you will be charged a 15% penalty for early withdrawal, this penalty applies any time before you are 59 1/2 years old, unless you meet one of the other qualifiers. Move it to cash (the mkt is way to frothy) and leave it there, you got a start. If you leave that employer you would wanna roll it into an IRA, which can be set up at e-trade, schwab, etc. You could roll it (transfer) to the next companies 401k but they will have less investment options and higher cost than an IRA.

Absolutely excellent answer. The short version, you will pay a boat load in taxes and penalties.

Does your company match?

 

[chael777]

Look into LLC's and corporations. It does not take much to set one up. You can roll your IRA into your own company, but you'll need an accountant. No penalties there, because its not a cash out

 

[qbkilla]

yes my company does match,,but transamerica over the phone told me i 100% can not take out money unless it is for 1 of 6 reasons, or i leave the company. The 6 reasons are the ones i listed in the initial post. THey said i can only take a loan from it if its over 2k saved, witch it is not.

They said if its not 1 of the 6 reasons, i can't touch the money unless I leave the company.

 

[jcc80]

yes my company does match,,but transamerica over the phone told me i 100% can not take out money unless it is for 1 of 6 reasons, or i leave the company. The 6 reasons are the ones i listed in the initial post. THey said i can only take a loan from it if its over 2k saved, witch it is not.

They said if its not 1 of the 6 reasons, i can't touch the money unless I leave the company.

They're correct. End of story, unfortunately. (this was my profession until a little less than a year ago)

On the flip side, you may be more than a little bit surprised at how much money you'll need to retire, and how much more you'll have to put away if you wait till age 35 to start. I'd reconsider if I were you.

 

[edeja7]

its true. where i work at they have the same rules. its through trowe price. i have pulled money out a few times under the hardship rules. (those are the reasons you listed.) also you can only take what you invested not what they put in to match. it is pretty easy though, all i did was print out a form fill it out & 2 weeks later i had the check in hand. maybe you should invest a little more ro qualify. i dont think youre locked in @ 4% are you?

 

[ECB]

Up to what % will they match? ie. some companies will match 100% up to 4% of your salary, some 6%, some 2%.

IMO you are crazy to not be putting that 4% in there, especially if it is matched. YOU ARE 30! This is the time to save, and honestly you are not even going to notice that 4% because it is pretax dollars.

If you wait even say 7-10 years you are looking at giving up potentially hundreds of thousands of dollars on the big end(retirement). That is time/money you will never get back. Shit honestly even 30 is getting a late start, ideally one would start one in their mid 20's.

Figure out whatever they will match, and max that out IMO(unless it is some ludicrous amount)

 

[edeja7]

good advice above. my company will match .50 on the dollar up to 6%. even if you dont want to play the stock market and opt for a money market acct. or us bonds youll have made 50% on your money
its easier to rebound/suffer now at your relatively young age than when your 60/70 yrs old.

 

[j6]

Not sure this was discussed but unless your not or no longer working for the company your only option is a loan. You can NOT withdraw the money.. You MUST me separated from service.

Good luck,

J6

 

[j6]

Not sure this was discussed but unless your not or no longer working for the company your only option is a loan. You can NOT withdraw the money.. You MUST me separated from service.

Good luck,

J6

YUP... it WAS answered.. Sorry for the repeat.

j6

 

[qbkilla]

Look into LLC's and corporations. It does not take much to set one up. You can roll your IRA into your own company, but you'll need an accountant. No penalties there, because its not a cash out

so you mean i can roll it into another account, then cash it out?

do you guys who posted think this is a way i can actually touch the money?

and thanks for all the replies, i def agree i need to start managing my money better now that im 30

 

[jcc80]

SOME companies allow non-hardship withdrawals in order to roll over into an ira. In the five years I spent in that industry, I didn't find one.

Leave it alone. Download an app called 'Financial Calculators'. Look at what happens when you put away $200 per month for 35 years, earning 10% average rate of return. Now run the same scenario for 30 years. Then 25.

You'll see the difference between starting now vs waiting 5 years until things are 'better' (and they rarely are).

 

[Moe1ron]

If you really need the cash immediately see if you can barrow against it.. Usually you can only barrow half of the amount in there but what they will do is withdrawal some from each check until you pay it back.. This way you keep the account open but get some of the cash you need now.

 

[fruitrollup]

and you'd have 6 months to pay it back (above post)

 

[chainheart]

Ex hiding 401K money before divorce

...anyone know if an ex (we're separated) can cash a 401K and then hide it in an account under an adult child's name (my adult child is unaware she has done this)

i never knew ex had this 401k money until after we split - and she is unaware that i know, (unless one of you guys are screwing her and reads this)


This posts not meant to diagnose or treat health issues.

 

[OutToLunch]

...anyone know if an ex (we're separated) can cash a 401K and then hide it in an account under an adult child's name (my adult child is unaware she has done this)



i never knew ex had this 401k money until after we split - and she is unaware that i know, (unless one of you guys are screwing her and reads this)





This posts not meant to diagnose or treat health issues.

Highly unlikely

 

[Deleted member 121863]

...anyone know if an ex (we're separated) can cash a 401K and then hide it in an account under an adult child's name (my adult child is unaware she has done this)

i never knew ex had this 401k money until after we split - and she is unaware that i know, (unless one of you guys are screwing her and reads this)


This posts not meant to diagnose or treat health issues.

sure she could cash it out and get a check, then its just money in a bank account and can be put any place. She would then have to pay ordinary income on that entire amount in the next tax year. There would def. be a paper trail of that money coming from 401k to a bank account in her name then going someplace else. It would also should up on her next tax return as income... unless she got real stupid and decided not to pay tax on it, that would come back to bite hard.

 

[chainheart]

Thank you guys.

Anyone else have an angle on how to use this in divorce court please have at it. The journey involves someone with a high IQ. Self love and contempt for "man" has taken this beyond typical emotional divorce unfolding. I have not discussed particulars with anyone but four close family members and only one of two very trusted friends.

Deceitful and desperately wicked. Don't want to go over the top, but it's Alfred Hitchcock from the beginning. (and no i don't return contempt towards women)



Post not meant to diagnose or treat health issues.

 

[sub7percent]

Thank you guys.

Anyone else have an angle on how to use this in divorce court please have at it. The journey involves someone with a high IQ. Self love and contempt for "man" has taken this beyond typical emotional divorce unfolding. I have not discussed particulars with anyone but four close family members and only one of two very trusted friends.

Deceitful and desperately wicked. Don't want to go over the top, but it's Alfred Hitchcock from the beginning. (and no i don't return contempt towards women)



Post not meant to diagnose or treat health issues.

I think it depends on the state you were married in and live in. I would think that her 401k would likely be "marital property" to some extent, and she HAS to disclose that. You really need to consult a lawyer for this, but I doubt she can get away with that.

And yes, if she takes a distribution from her IRA there will be a federal tax form 1099 filed with the government regardless of whether she claims it as income on her tax return. She could, however, borrow from it, but if she did that after you are separated or in connection with the divorce then I am pretty sure she will have to put it back into the marital asset pool.

But yea, consult a lawyer.