can you withdraw your complete 401K

[Liviathan]

I am highly dissapointed with my 401K perfomance plus my investment choices in my 401K. Personally i have been doing a lot better this year...i am actually in positive territory...

so i can withdraw my 401k and put the cash in my brokerage account??

 

[Ameesh]

with heavy penalties, so heavy you wont want to do it.

 

[vi edit]

link

 

[Evadman]

So, if I die, I am not subject to the 10% fee right? cool.

brb.

 

[Zebo]

Big scam. Almost forced contibution. I pay 10% and employer matches, how could anyone turn that down. But now it's worth less than I alone put in.

 

[FeathersMcGraw]

Originally posted by: Liviathan
I am highly dissapointed with my 401K perfomance plus my investment choices in my 401K. Personally i have been doing a lot better this year...i am actually in positive territory...

so i can withdraw my 401k and put the cash in my brokerage account??

Sure, you'll just get assessed an early withdrawal penalty and forfeit any matching funds that haven't vested yet. You'll also be paying taxes on any capital gains that you make on your investments outside another retirement vehicle like an IRA.

A 401(k) is a retirement vehicle. One (or even two or three) year's poor performance shouldn't be a compelling reason to withdraw unless you're in your 50s already.

 

[BoberFett]

Yep. I did last winter.

They'll withhold taxes and the penalty, and report it to the IRS.

 

[JoeBaD]

You should look at the plan's Summary Plan Description. It will tell you the specifics of your 401k.

In general, if you contributed pre-tax and you withdraw your contribution you will have to pay ordinary income tax on the amount of the gross distribution plus a 10% penalty. Your Employer will withhold 20% of the total distribution for Federal tax purposes.

Your employer's contribution may or may not be withdrawn based upon your vesting rights as explained in the plan's Summary Plan Description. If you can withdraw all or part of the employer's contribution you will be taxed the same as a withdrawal of your own contribution.

 

[RossMAN]

It depends on your 401k, if you are fully vested and their rules for withdrawal.

I would recommend against it, the taxes and penalties just aren't worth it.

 

[Moonbeam]

You have died and your beneficiary gets the money.

Um, excuse me, I died and am here to check on the qualification requirements of my beneficiary.

 

[CPA]

Originally posted by: JoeBaD
You should look at the plan's Summary Plan Description. It will tell you the specifics of your 401k.

In general, if you contributed pre-tax and you withdraw your contribution you will have to pay ordinary income tax on the amount of the gross distribution plus a 10% penalty. Your Employer will withhold 20% of the total distribution for Federal tax purposes.

Your employer's contribution may or may not be withdrawn based upon your vesting rights as explained in the plan's Summary Plan Description. If you can withdraw all or part of the employer's contribution you will be taxed the same as a withdrawal of your own contribution.

Everything is correct, except I believe the Account (Fund) Manager (not Employer) must withhold 28%, not 20%.

 

[CPA]

when returns are low, the best thing to do is take a loan on your 401K, then payoff high interest obligations. Then pay back with additional contributions. The interest, usually 6-7%, is also applied to your account.

 

[kranky]

Originally posted by: Carbonyl
Big scam. Almost forced contibution. I pay 10% and employer matches, how could anyone turn that down. But now it's worth less than I alone put in.

So you are saying that your 401k is down over 50%? Who decided where the money is invested?

 

[RossMAN]

Originally posted by: CPA
when returns are low, the best thing to do is take a loan on your 401K, then payoff high interest obligations. Then pay back with additional contributions. The interest, usually 6-7%, is also applied to your account.

I completely agree. My employer makes available a maximum of 2 401k general purpose loans per year up to 50% of your vested balance. The great thing about taking a 401k loan is:
1) You're instantly approved, there is no credit check, no application hassle.
2) The rate is better than a personal installment loan from a bank or CU.
3) You're paying back your own account, not some bank.

 

[Evadman]

Originally posted by: RossMAN

Originally posted by: CPA
when returns are low, the best thing to do is take a loan on your 401K, then payoff high interest obligations. Then pay back with additional contributions. The interest, usually 6-7%, is also applied to your account.

I completely agree. My employer makes available a maximum of 2 401k general purpose loans per year up to 50% of your vested balance. The great thing about taking a 401k loan is:
1) You're instantly approved, there is no credit check, no application hassle.
2) The rate is better than a personal installment loan from a bank or CU.
3) You're paying back your own account, not some bank.

You also pay yourself the interest. No money goes to anyone except back into your 401k.

 

[JetsFanatic]

The penalties make it not worth it.
Normal tax plus 10%
and only what is vested
unless you claim a hardship

 

[Zebo]

Originally posted by: kranky

Originally posted by: Carbonyl
Big scam. Almost forced contibution. I pay 10% and employer matches, how could anyone turn that down. But now it's worth less than I alone put in.

So you are saying that your 401k is down over 50%? Who decided where the money is invested?

When there is only about 10 funds with two companies you're allowed to invest in, it's a scam, they still make money win or loose, your options are very limited, and you basically must invest to get the employer match. Why not allow a person to really decide where to invest with the same tax benefits? Like a business, real estate speculation etc.? No. they've formulated it so the middle class (almost has to) pay to keep the market inflated and these crazy high P/E ratios instead of investing thier monies where they choose to.