How long does it take to get 401K disbursement for under 59 1/2 year old, hardship withdrawal once filed?
Concerned asked:
My husband has been out of work and we have separate 401k plans but need to take a lump sum from his plan to help with the bills or we won’t have a place to live.
1. How long does this process take?
2. We want to opt for the 10% and 20% tax and penalty to be taken out before the disbursement. Will we be taxed or penalized again on it when we file our taxes?
This entry was posted
on Tuesday, February 24th, 2009 at 12:00 am and is filed under United States.
You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
My husband has been out of work and we have separate 401k plans but need to take a lump sum from his plan to help with the bills or we won’t have a place to live.
1. How long does this process take?
2. We want to opt for the 10% and 20% tax and penalty to be taken out before the disbursement. Will we be taxed or penalized again on it when we file our taxes?
February 25th, 2009 at 9:41 pm
Ask the trustee of the 401K plan how long it will take - each one is different. They should be able to give you a good idea on when you’ll get the check.
The amount taken out for tax is just withholding, like the amount taken out of your regular paychecks. If you have the 20% plus the 10% penalty taken out, and your tax bracket is less than 20%, you could end up getting some of it refunded to you since you’d owe less than what was withheld. If your tax bracket was more than 20%, then you could owe more
Good luck.
February 27th, 2009 at 6:24 am
1) No Idea.
2) Generally, the trustee will withhold 20%. This twenty percent usually doesn’t cover the entire tax bill for the withdrawal but it is impossible to know what the total bill will be without knowing your total income for the year and the amount of the withdrawal.
March 1st, 2009 at 12:57 am
The length of time is determined by the particular plan rules and conditions. He needs to consult the 401(k) custodian. The penalty and 20% withholding is like any other withholding. When you file your 2008 tax returns, you will have to pay any additional amount due, or perhaps will get a small refund if 20% is more than your tax bracket.
March 3rd, 2009 at 7:02 am
I just requested a distribution from my 401(k) plan. I was told it would take 5 to 7 days to get the check. Your plan might be different but I suspect the 5 to 7 days is a pretty good benchmark.