Can i take money out of my 401k if im L-Off?, page 1

Can i take money out of my 401k if im L-Off?, page

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Topic started on 14-2-2009 @ 05:50 AM by NickT916

I hope this is in correct section, i didnt see a financial section. I was laid off for the past 5-6 weeks, is there a way to get my 401k out to help with finances? I started at 2007.... in mid 2008 i stopped it because i was actually loosing money. I didnt save much in there only $2,500 or so... but almost 30% of that went down the drain... so im wondering, since i was laid off for this period, cant i legaly take it out? or is it different from company to company... i feel if i call them they might give me some bull or might lie to me... i just dont trust anyone anymore thats touching my money.

Im almost debating to pull out of the banks while i still can

reply posted on 14-2-2009 @ 05:59 AM by Griff

reply to post by NickT916

I could be wrong, but I believe you can. It's your money. You'll get taxed to all hell though. That $2500 could easily become $1500 after taxes. I'm no tax expert, so don't take those figures literally.

reply posted on 14-2-2009 @ 06:25 AM by St Udio

reply to post by NickT916

for the ammount of money in your 401k account... i'd cash the whole thing in...because a lot of advisers are telling inquisitive people like yourself to get out of the market already.

there's some older advice from 2007 (before the loans availability dried up)
archives.chicagotribune.com...

...Almost all plans allow borrowers to take money out of their 401(k) accounts and repay it plus interest, which is typically 1 or 2 percentage points aboveprime.
Although plans vary, the most you can borrow typically is the lesser of
50 percent of a vested balance or $50,000.
Employees usually must repay money borrowed for a mortgage within 15 years,and money used for other purposes within five years.
Most loans also have a$50 to $100 fee.

If you fail to pay back the loan on time and are younger than 59 1/2, you
are subject to regular income tax and a penalty tax of 10 percent for earlywithdrawal.

i think the underline text applies to your case...
heck a $2000. withdrawl would be a tax penalty of $200 extra at 15 April
and a bump up of 'income' on that Line 34 (total Adjusted Income)

but since your earned income & taxes withheld on paychecks won't
match up, you will likely have to pay another ~$50 on top of the
withheld weekly taxes on your paystubs/ or {W-2/ form 1099}

perhaps your tax situation, even with cashing the 401k balance, might
not even result in higher taxes, but you still have to pay that 10% penalty
over-&-above any tax liability...

good luck

+++++++

Oh yeah, it will likely take anywhere from 4 to 12 weeks for the
money from your 401k to get into your hands..
they hate sending out money & will legally drag-their-feet,
especially now with the economy in the shape its in.

[edit on 14-2-2009 by St Udio]

reply posted on 14-2-2009 @ 06:33 AM by dolphinfan

reply to post by NickT916

First, there are a number of kinds of plans and you should check with your plan administrator, who should have a website listed on your monthly/quarterly statement. Generally, if it is a ERISA qualified plan, you are able to pull your cash out, but it will be taxed as normal income. You may also be able to take a loan out against the value of the plan, but that is risky as the value of the plan could drop below the loan amount and that places you in a bad spot.

Now that may not be a problem for you if you are not working as the tax refund you may get due to your not working may off-set the spike in income tax caused by pulling the money out, but that is math you'll need to do.

reply posted on 14-2-2009 @ 07:26 AM by Blueracer

I have a 401k and I cannot take money out unless employment is terminated. Or until retirement.

reply posted on 14-2-2009 @ 08:34 AM by keeff

yes you can take money out of your 401-k. but you need to claim a "hardship" if you do not want to take it out as a loan to yourself that has to be paid back to yourself.

i have done this as well as a friend of mine.

reply posted on 2-3-2009 @ 10:05 PM by dodadoom

reply to post by NickT916

You should check with your program administrator or human resource person. I would call your retirement company directly if I we're you, before doing anything drastic or listening to us. Theres no way we could know the specifics of your plan here. Sorry.

This info should be in your plan paperwork anyhow's.

Mine is a 401K similar to others, you can take it out early but you sure pay dearly!

Hope it helps! When finding the correct answer, go right to the top!

reply posted on 2-3-2009 @ 10:12 PM by David9176

I'm not in 401k right now...but i was.

I was able to tax the amount i was submitting from each check BEFORE it went into the 401k.

This enabled me to pull out all of my money at anytime with no penalty....which quite honestly it should be that way...it is YOUR money.

You may not be on this plan but it is out there.

reply posted on 2-3-2009 @ 10:23 PM by Melissa101

Originally posted by NickT916
I hope this is in correct section, i didnt see a financial section. I was laid off for the past 5-6 weeks, is there a way to get my 401k out to help with finances? I started at 2007.... in mid 2008 i stopped it because i was actually loosing money. I didnt save much in there only $2,500 or so... but almost 30% of that went down the drain... so im wondering, since i was laid off for this period, cant i legaly take it out? or is it different from company to company... i feel if i call them they might give me some bull or might lie to me... i just dont trust anyone anymore thats touching my money.

Im almost debating to pull out of the banks while i still can

If you are on a permanent layoff yes you can get your money. If you can prove hardship you can also get your money even if you go back to work. The only problem is you will have to pay the early withdrawl penelty; about 20-30% and you will have to pay taxes on the money you withdraw; and you can pay that off the top or file it on your 2009 taxes. My husband and I both emptied our 401K (we are both laid off) as quick as we could as to not loose anymore in the market. Get it out asap, a little is better than none! We also stopped using the bank as did most of our family, so I think that is a smart idea. Get yourself a fireproof safe or a safety deposit box somewhere to keep your cash in. If you can buy some gold too, even a little is a good investment now where our dollar is very uncertain right now. May God bless you and your family, oh also put out a garden this summer and put up all the food you can, if your not working a "regular" job make use of this time to prepare and put up what you can.

reply posted on 2-3-2009 @ 10:40 PM by spacedoubt

reply to post by NickT916

You need to do SOMETHING. Either take it out, or roll it over into some other retirement device. I'm surprised they didn't mention something when they laid you off.
I took most of my money out early last year. So I missed out on a major part of the downslide. Some I borrowed, some I withdrew (paid tax on that).
It's a rather small amount as retirement funds go. If it were me, I would simply take the money, and the tax penalty. (but that's me)

I'm sorry that you lost your job BTW. Good luck to you!

[edit on 2-3-2009 by spacedoubt]

reply posted on 2-3-2009 @ 10:42 PM by XTC_savedmyLife

dont let it get taxed... you need to roll it over into something.. then talk to a CFP, and not an ATS member

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