How can I access my 401K for funds, if fired from work?
soulravah asked:
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I have money invested in my 401K.
If I get fired from work, what kind of taxes will I owe if I need to access my 401K for funds, while looking for a new job?
Thanks!
January 25th, 2009 at 3:34 pm
It is regular income taxed at your regular rate - plus a 10% penalty for amounts withdrawn before age 59.5.
January 26th, 2009 at 11:52 am
You will have to pay taxes on the full amount withdrawn, then they will take a 20% penalty right off the top. In some instances, you can take out a loan, which is different, but that might only work if you are currently working.
In that scenario, you are paying yourself back, so there aren’t penalties, but there may be taxes involved. We borrowed against ours for a home down payment years ago, and I don’t recall…and the laws may be different now.
Call the 401K company and ask…also, don’t take the money out because you are leaving…you can transfer to your new employers’ account, or open an IRA at a local bank, etc.
Good luck. It is such a blow to get fired, but in these tough times, it is happening to a lot of good people who don’t deserve it.
January 26th, 2009 at 6:07 pm
You will be charged a 10% penality if under 59 1/2 and will have to pay taxes on the amount you deduct from that 401k. You can opt for no taxes at this time and pay them when you file your taxes for 2008. I have done this and it isnt that bad. Hey if you need the money you have a right to obtain it.
January 29th, 2009 at 11:51 am
If you withdraw the money, you’ll pay regular income tax on it, plus a 10% penalty if you are under age 59-1/2.