401k
401k Information

Jpmorgan 401k

401k Early Withdrawalaonly as your very last resort 00004000

Do NOT Seriously Consider 401k Early Withdrawal

You do not want to consider a 401k early withdrawal unless you face a serious emergency or a monumental expense you cannot meet any other way. A 401k early withdrawal represents your last resort; do not consider it until you have exhausted all your other options, consulted with a professional financial planner, and looked very carefully at all your assets and resources.

In fact, the IRS stipulates the conditions under which you may take a 401k early withdrawal without penalty:

The death or permanent disability of the plan participant

You have reached age 55 and have left or retired from the company that maintained your 401k. aLefta would include both fired and quit, in which case the company either would encourage or would require you to collect or rollover all the funds in your 401k. Some companies demand that you liquidate your 401k within 60 days of your separation from service, and many charge administrative fees after the sixty-day limit.

You are receiving your retirement funds under an arrangement for asubstantially equal paymentsa over a lifetime. At least in theory, this exception would apply if you met the criteria for retirement or you had become permanently disabled. The difference here turns on the distinction between a lump-sum distribution and the agreement to accept periodic payments.

You paid medical expenses totaling more than 7.5% of your adjusted gross income. You do not have to itemize your deductions on your income tax forms to qualify for this exemption, but you must be prepared to substantiate your claimsa”a properly legal way of saying asave all your bills or receipts.a

You are subject to aa qualified domestic relations court orderaa”another very properly legal way of saying that a divorce decree or separation agreement instructs you to take a 401k early withdrawal in order to compensate your ex-spouse.

If you do not satisfy the criteria for a 401k early withdrawal without penalty and tax consequences, you will pay an extra 10% tax on the taxable amount of the withdrawal. And the whole 401k early withdrawal usually is taxable, often at the highest rate the law allows. In some exceptional circumstances you can avoid the penalty, but the 401k early withdrawal always will be added to your income for the year in which you take the distribution. The addition may bump you into a tax bracket which bears no resemblance to the reality of your financial life.

Given that your 401k probably numbers among your largest financial assets, the temptation to cash-it-out makes perfect sense, and some circumstances may render the 10% penalty and extra income taxes almost tolerable. Remember, though, that you have other ways to take money from your 401k without enduring the most painful consequences: Consider, for example, taking a loan from your account instead of requesting a 401k early withdrawal.

Most of all, as you begin weighing any of these options, speak with the 401k administrator at worka”usually the payroll person or the Human Resources Specialist. And, then, definitely talk to your tax advisor or your financial planner. Do not make this decision without benefit of expert counsel, and do not make-up your mind too quickly.

Frequently Asked Questions

  1. QUESTION:
    what does it take to get JPMorgan Chase Bank to let go of some of 401k for a hardship case?
    We can’t get anything out of them, now they want to send us to bankruptcy lawyer… release our friggin money and we won’t need bankruptcy? GRRRR help?

    • ANSWER:
      Your idea of a hardship and your company’s are two different things. The administrator of the account, JP Morgan does not have the authority to make that decision. You need to speak to your company HR person.

  2. QUESTION:
    Can I use 401k Hardship Withdrawal if I have money in the bank?
    I would like to buy a house, say for 100K. I want to put 20% down and I do have 20K in my checking account. But I would rather take 26K (20K minus tax and penalties) out of my 401K even if I can afford it.

    JPMorgan and IRS say I can take out (Not borrow, you don’t have to pay it back) money out of my 401K under the “Hardship Withdrawal” for the downpayment only. Will I qualify since I could afford the 20K downpayment with my checking account? In other words, must I legally pay off my downpayment with my cash at hand before dipping into my 401k?

    I can’t find any of these details online. I already know all the pitfalls of a Hardship Withdrawal versus loans etc.
    Great answer Ryan M. You mention a 10% penalty off the bat…where does that come from? I called JPMorgan and they said there is no penalty under my plan. Just taxes :(

    • ANSWER:
      A hardship withdraw has nothing to do with outside moneys. JPMorgan will have no way to find out if you have money inside your banking account. However, I would try not to take a hardship out of your 401K unless you ABSOLULTY need the money to put down on the house. You will lose 10% right off the top, and then have to pay standard income on the moneys. Also, when taking out 26K or 32500 (you are allowed to gross up the amount by 25% and withhold 20% to cover some of your taxes) you might be raising your tax bracket, and you might owe even more tax. I would talk to a CPA before taking out any money, but just remember this should be a last resort. You don’t want to hinder you retirement goals.

      *****More information ****

      The 10% is a penalty that is from the IRS if you are under 59 ½ years old. This is true for all qualified plans (meaning tax differed). The only way around the 10% would be “IF” the money was in a traditional IRA (Individual Retirement Account) and this would be your first home that you are buying. The IRS will allow the 10% to be waved for the fist 10,000 that is taken out for first time home buyers. If JP Morgan will allow you to roll the moneys into a traditional IRA while in-service, you might be able to get around the 10%, but most, if not all, 401K plans will not allow you to just rollover funds until you leave the company, or 59 ½ (or) 691/2 years if age while in-service. (depending on the plan rules)

      You might have just talked to someone in the call center that is either not licensed, or doesn’t know what they are doing. When it comes to the IRS, you should always listen to a tax advisor and not someone at the company where the funds are held. I hope that cleared it up a little for you. Best of luck with the new house.

  3. QUESTION:
    401k Hardship Withdrawal – can I use it for next year?
    I have taken a hardship withdrawal from my 401k pension account, after I provided documentation that I am in agreement with a bank that I will buy a forclosed home. The deal didn’t happen so I ended up with the 401k money into my account.
    I called my 401k administrator jpMorgan and they told me that I can’t put the money back into the account.
    I don’t want to pay huge taxes for those money, I am looking to buy a home this year but if I will not buy this year can I use it to buy a home next year and not declare it next year? I really don’t want to pay the big taxes and penalties. Is there any way I can put those money back into my 401k account?
    Thank you.

    • ANSWER:
      You’ll be paying the taxes and penalties whether you buy a home this year or not. And you’ll get a 1099-R for the withdrawal, and have to claim it in the year it was withdrawn.

      There is a limited exemption for IRA’s from paying the penalty if the money is used for a first house, but not from 401K’s. The hardship provision just let you take it out at all, without quitting your job.

  4. QUESTION:
    Can I cash a check from JPMorgan in my account for a friend?
    My girfriend has a check from jpmorgan for her 401k. She has no bank account at this time. Would she be able to sign it to me somehow and I deposit it in my account? Or would it be better just to take it to a chase bank and have them cash it on the spot there if possible? Thanks! Just looking for procedures thanks for reading and have a great one!
    Not that this is part of the question however one was given here so I will answer. She did have an account through a credit union through her old employer when she left her job of course that account was cancelled automatically. Not going to open an account in the states as the economy is collapsing before our very eyes and it will not stop. I know that sounds difficult to fathom a complete economic collapse but that is going to happen and will have dire consequences in this great nation. I may have her open an acct however will withdraw pretty much all once check clears.

    • ANSWER:
      She can sign the back as

      Pay to the order of (your name)
      (Her signature)

      Then you can deposit it into your account. After the check clears you can withdraw the money.

      Make sure you understand the tax implications here. If she is cashing out an old 401k account and she does not put the money into another qualified retirement account, such as an IRA then she will have to pay income taxes plus a 10% penalty at the end of the year. If this all sounds confusing to you then you should talk to an investment broker about how to proceed before you cash the check and go spend it.

  5. QUESTION:
    Help, young and new to 401k stuff… Don’t know where to start!?
    I’m a 24 year old, first full time job after some internship experience. I’m currently putting in like 10% (with additonal 4% matching from employer) and I’ve got two 401k accounts, one with Fidelity and another with JPMorgan. Fidelity was from previous employer, now rolled over into IRA, fully vested. From my internship, my colleagues told me the benefit of investing early, so I’ve controlled my expenses to be able to save 10%. I’ve got up to about 7k from both accounts so far. But aside from basic asset allocation, I don’t think know where to begin as far as taking active role in my investments. Where do I begin? What do I do? Where can I read up?

    • ANSWER:
      One nice thing about long term retirement saving you do not “need” to take an active role in managing that investment. The long term aspect reduces risk, almost eliminates short term risk, as averages returns over decades.

      To start, in the K.I.S.S attitude, Keep It Simple Stupid, I really like the target retirement funds that many plans offer and they do your balancing for you and get slightly more conservative every year.

      Other balanced funds will also do your balancing for you without the target age function that increases bonds by about 1% a year. Personally I am more aggressive than the target funds. But you can pick an age further out that has a higher stock component to start. Or shift along the way.

      But I also reduce stocks at the highs and increase them at the lows for a little timing (Kentucky windage one person calls it). But it was many many years of learning before I felt comfortable doing that other than being able to see the extremes like over priced internet bubble or the market hitting new highs a couple of years ago while the banks were in serious trouble.

      I would suggest if your taxable income is low you should reduce you savings in the 401(k) to the maximum match 4% and invest the other 6% on a taxable basis. The reason being you have to pay taxes sometime and the assumption on deferred taxation assumes you will be in a lower tax bracket in retirement than you are now. That is generally not true starting out. Increase retirement savings later when in a higher tax bracket when older and you will get a bigger benefit.

      Also it will be easier to do that if you have taxable saving outside the plan. But that is assuming you will do that and not spend the money.

      I also suggest starting out with some taxable investments that pay a high yield that you have paid to you and SPEND that. That is to reward you for saving and help teach you, reinforce the concept that there is a reward for saving. And that money starts out small and builds so it also teaches that getting rich takes time and a long term viewpoint.

      Good Luck.

  6. QUESTION:
    HELP! 401k enrollement?
    At my job, i have been told i need to do my 401K enrollement.. the only thing is.. i have no idea what i should invest in. what percentage should go where… Please help me by telling me the basics of the 401k and how it applies to my life…

    I am a college student, and am not dumb or anything like that. I understand that I am going to need my 401k and that it rolls over… I just do not know anything else about 401k/ investments

    Can you help break it down for me…

    BY THE WAY.. I am being asked to set of investments for future contributions. What percentage should i choose for each

    Short-Term Fixed Income Fund 0% %
    Stable Value Fund 0% %
    Government Inflation-Protected Bond Fund 0% %
    Core Bond Fund 0% %
    Intermediate Bond Fund 0% %
    High Yield Bond Fund 0% %
    Large Cap Value Index Fund 0% %
    Large Cap Value Fund 0% %
    Growth and Income Fund 0% %
    S&P 500 Index Fund 0% %
    Large Cap Growth Index Fund 0% %
    Large Cap Growth Fund 0% %
    Mid Cap Value Fund 0% %
    Mid Cap Growth Fund 0% %
    Small Cap Index Fund 0% %
    Small Cap Core Fund 0% %
    Small Cap Blend Fund 0% %
    International Large Cap Value Fund 0% %
    International Large Cap Index Fund 0% %
    International Large Cap Core Fund 0% %
    International Small Cap Fund 0% %
    JPMorgan Chase Common Stock Fund 0% %
    Moderately Conservative Portfolio 0% %
    Moderately Aggressive Portfolio 0% %
    Aggressive Portfolio 0% %

    • ANSWER:
      You need to talk to your HR department. It also might make sense to read a financial book or two. You need to get a sense of your own tolerance for risk and then try to match investments to that and at the same time make sure you’re well diversified. You’re not going to get that all here on YA!You need to do some homework. This is your money not ours.

  7. QUESTION:
    Where should I put my 401K money?
    Just Starting out in my 401K and wanted some opinions. Options are:

    Asset Allocation: Age Based
    Target 2015 Allocation 9.519
    Target 2025 Allocation 9.440
    Target 2035 Allocation 9.402
    Target 2045 Allocation 9.385

    Asset Allocation: Risk-based
    AXA Moderate Allocation 9.690
    AXA Aggressive Allocation 9.454
    AXA Conservative-Plus Allocation 9.743
    AXA Moderate-Plus Allocation 9.579

    Investment Grade Bonds
    EQ/JPMorgan Core Bond 9.913

    High Yield Bond
    Multimanager High Yield 9.992

    Large Cap Growth
    EQ/T. Rowe Price Growth Stock 9.965
    EQ/Large Cap Growth PLUS 9.778

    Large Cap Blend
    EQ/Davis New York Venture 9.336
    EQ/Equity 500 Index 9.384

    Large Cap Value
    EQ/JPMorgan Value Opportunities 9.066
    EQ/AllianceBernstein Value 8.971

    Mid Cap Growth
    EQ/Van Kampen Mid Cap Growth 10.043

    Mid Cap Blend
    EQ/FI Mid Cap 10.247

    Mid Cap Value
    EQ/Lord Abbett Mid Cap Value 9.626
    EQ/Mid Cap Value PLUS 9.479

    Small Cap Blend
    EQ/Small Company Index 9.879

    Others, but ran out of room. Thanks

    • ANSWER:
      Sit down with a registered financial adviser and the two of you can plot your 401k strategy. Just make sure you interview several candidates and pick a financial adviser you trust and who has a good reputation.

  8. QUESTION:
    Where do I invest the money for my 401K?
    I am 51, I have 345K in my 401K. Too late after the market dropped, I took it and moved it to the ‘safe’ stable value. Now, months after the market has gone back up, I’m sitting down to figure out where to put the money and I really have no idea. JP Morgan says 68% should be in stocks, I don’t even know which ones stocks are. Here are my choices:  
    JPMorgan Stable Value
      PTTRXPIMCO Total Return-Inst
      ACITXAmerican Century Inflation-Adjusted Bond-Inv
      RLBFXAmerican Funds Balanced-R5
      DODGXDodge & Cox Stock
      FCNTXFidelity Contrafund
       Barclays Global Inv S&P 500 Equity Index-Q
      RMCVXRiverSource Mid Cap Value-R4
      RPMGXT Rowe Price Mid Cap Growth
      NBGIXNeuberger Berman Genesis-Inst
      TASVXTarget Small Cap Value Portfolio
      JDSCXJPMorgan Dynamic Small Cap Growth-Select
      RERFXAmerican Funds EuroPacific Growth-R5
      STLAXBarclays Global Inv LifePath Retirement-I
      STLBXBarclays Global Inv LifePath: 2010-I
      STLCXBarclays Global Inv LifePath: 2020-I
      STLDXBarclays Global Inv LifePath: 2030-I
      STLEXBarclays Global Inv LifePath: 2040-I
    What the heck should I do? Risk info? Well, I was laid off in Mar 2009, owe 300K on a 1mil home, have 2 kids aged 8 and 10 (one special needs) and an adoring wife. Needs are simple, just pay the mortgage and afford insurance and groceries. I would like the 401K to grow, I don’t want much risk, and the safe stable growth is too slow.

    • ANSWER:
      You’ve done the exact opposite of what you should have done like many individual investors. While the market was riding high you were buying stock funds like crazy. The market crashed so you sold out. Bought high, sold low. Absolutely crazy. And now that the market has run up, you missed the boat and want to buy high again after which if the market crashes again, you’ll most likely sell again, not having learned anything from your past experience. So what kind of advice to give a person like you? Pick a diversified set of mutual funds and leave it alone.

      I will give you one little tip. Obama’s crazy spending and socialistic policies will eventually crash our dollar. Investing in gold stocks and other natural resources, oil, gas, metals, etc. will do good in the long run if you buy my scenario. Good luck.

  9. QUESTION:
    Which ING 401k plan?
    I am signing up for a 401k plan for the first time. We have ING. I was wondering where I can find more information about the various funds? I don’t want to invest in anything mortgage or credit card related, but rather technology and things I believe in. These are the options on my form. What do I do?

    ING Fixed Account (xxx)
    ING VP Money Market Portfolio – I (003)

    ING Intermediate Bond Fund – A (497)
    Pioneer High Yield Fund – A (948)

    ING VP Strategic Alloc Consv Prtf-I (033)
    ING VP Strategic Alloc Growth Port-I (031)
    ING VP Strategic Alloc Mod Prtf-I (032)

    Pax World Balanced Fund (193)

    ING VP Index Plus LargeCap Port – I (035)
    Oppenheimer Main Street Fund – A (958)
    Washington Mutual Investors Fund-R3 (482)

    Fidelity VIP Growth Portfolio – Init (109)
    Baron Asset Fund (921)
    Lord Abbett Mid-Cap Value Fund – A (976)
    Lord Abbett Small-Cap Value Fund – A (362)

    ING JPMorgan Int’l Port-Init (104)
    New Perspective Fund – Class R-3

    • ANSWER:
      None of these funds are specific to technology – and that is fortunate for you and your company. The company has an obligation to keep your 401K diversified.

      Taking sector bets is fun and can be rewarding, but can also hurt your returns if you are wrong. This is retirement money and should be treated as such.

      The easiest option – if you are unfamiliar with investing is to do the ING BP Strategic Allocation according to your risk tolerance. If you don’t want to do that, the rest of the funds in this portfolio are very good funds….just remember to keep it balanced. Use international, US Large cap, Bonds, and smaller amounts of Small and Mid cap funds….

      Good luck.

  10. QUESTION:
    i have to liquidate my 401k after quitting job need help in how to do.?
    hello, i have a 401k that has about 25k in it. i have a loan attatched to it for 7k. can i liquidate it and have the 7k taken out of the 25k. i am not interested in a ira just want to liquidate it even if i have to pay the taxes on it. i dont have the 7k to pay the loan off first. please tell me if there is any way i can do this. i{m in a foreign country now and need the money i just moved a week ago. do i have to go through jpmorgan or do i have to go through my old employer…any help is greatly appreciated.

    • ANSWER:
      go through your old employer. They will have jp morgan liquidate the assets and then they will send you some of the proceeds. If you have 25k of stocks and 7k of loans for a total balance of 32k then you will have ,400 withheld and they’ll send you ,600. They’ll send the ,400 to the IRS but you’ll owe an additional 3k in early withdrawal penalties come April of ’09 so don’t use up all of that ,600.

  11. QUESTION:
    JPMorgan Personal Asset Manager. Is it worth it? What do they do? Am I paying .06% for a software program?
    My company recently switched our 401K’s to JP Morgan. I received an invitation from JP Morgan to use their new Personal Asset Manager. They charge .06% of your holdings value up to 100K, annually. The price drops once your over 100K. Is it worth it? Anyone else have any experience with the product? To me it seems, to be a cash cow for JP Morgan. They run your personal profile through some software, the results tell them what to do and they make the changes to your account. The software monitors your account while JP Morgan sits back and collects a check..again, and again and again…Am i just being a pessimist? Or is it a good product?

    • ANSWER:
      I suspect the software is an asset allocation simulator that gives you a preset mix of stocks, bonds and cash after you input your risk profile and time before you retire. Then, they re-balance for you periodically.

      You can get similar asset software for free at cch.finance.com, they have all kinds of calculators in addition to asset allocators.

      If you do not know how to determine your risk profile and time of investment, then maybe the service is OK – at least for one year.

      personally, I agree with you that it is a cash cow. They spend little or nothing to run the software and send you a flashy report. But it will cost you up to 0 ( if you have 100K ). easy money for them.

  12. QUESTION:
    How to invest for retirement??? Is JPMorgan ok???
    I am 26 and I have a 401k with about 15k so far. When I first invested I had to pick from a list of mutual & equity funds… They all had similar names and there were 20 of them so I just put 5% of my money in each one. In the last 3 years my $$ has grown each year and I have yet to lose money. So now my company is making this pitch with JP Morgan “professional asset manager” for them to invest my money for me. They sent me a brochure telling me I have it invested wrong. They will charge a flat 0.60% of my balance each year for their services. So does anyone have an opinion about JP Morgan… if you used them did you lose money? Really I don’t know anything about investing I just know that Social Security isn’t going to be there by the time I retire thanx to our inept government…

    • ANSWER:
      No reason to be alarmed. This happens within companies quite frequently. JP morgan is a highly reputable firm. One of their most prominent categories is investment management and I’ve had the privledge of working with many of those individuals that will be managing your money. Actually, .60% charge is relatively cheap compared to other firms. It would be hard to find someone that said they were disappointed or lost money with their funds.

  13. QUESTION:
    How should I invest in my 401K to get the most out of it?
    I have no idea what to do? However, I do like to play it somewhat safe. Any help is greatly appreciated!

    Investment Fund Percent

    Merrill Lynch Retirement Preservation Trust
    American Funds The Growth Fund of America – Class R3
    JPMorgan Government Bond Fund – Class A
    Janus Forty Fund – Class A
    PIMCO Total Return Fund – Class A
    Loomis Sayles Strategic Income Fund – Class A
    Victory Special Value Fund – Class A
    Munder Mid-Cap Core Growth Fund – Class A
    Allianz NFJ Small-Cap Value Fund – Class A
    Oppenheimer Transition 2010 Fund – Class A
    Oppenheimer Transition 2015 Fund – Class A
    Sentinel Small Company Fund – Class A
    Oppenheimer Transition 2020 Fund – Class A
    Oppenheimer Transition 2030 Fund – Class A
    JPMorgan International Value Fund – Class A
    American Funds EuroPacific Growth Fund – Class R3
    BlackRock Global Allocation Fund, Inc. – Investor A Class
    Franklin Income Fund – Class A
    American Funds Capital World Growth and Income Fund – Class R3
    BlackRock Equity Dividend Fund – Investor A Class
    BlackRock S&P 500 Index Fund – Institutional Class
    Neuberger Berman Partners Fund – Advisor Class

    • ANSWER:
      American Funds EuroPacific Growth is a good fund. It will provide you with an investment outside of the US. Maybe 20-25% allocated there. The rest of your options are somewhat less than ideal. Black Rock Equity Dividend is a good fund. It is mostly large cap US stocks. Maybe 35-40% allocated there. You need some small cap stocks too. You have only one choice there–Sentinel Small Company Fund. The other–Allianz NFJ Small Cap Value is also good. Maybe 15% in one or the other. At this juncture in time I would avoid bond funds completely although the experts say that every portfolio should include some but today they are just too risky. They do not provide you with any emerging markets funds. Darn. Put the rest in the S&P 500 fund since there are no better options available.

      Anyway that would be a decent selection of alternatives based on the options you have.

      One thing you need to know is that you need to allocate your investments across funds that provide different asset classes. That is what I have attempted to do here. That provides you with some diversification that hopefully will limit your risk.

      If you should wish to invest some money into a bond fund instead of the S&P 500 fund then choose the Pimco Total Return fund. But to me bonds are a loosing proposition these days.

  14. QUESTION:
    IRA assistance is needed?
    Year ago i took an early retirement at age 62, now i am 63, and moved my 401K funds into a IRA account at JPMorgan Chase. It is not earning much, its basically just sitting there in the IRA account. What would happen if i were to close the IRA account and get the cash? Is there still a penalty involved, even though i am already retired? I’ve heard that if i were to take the cash and close the account, all i have to pay is an income tax when i file next year. Also, wouldn’t i have to pay federal and state taxes on my withdrawal of IRA funds regardless of my age? Thanks for your input.

    • ANSWER:
      You are old enough to withdraw the funds without penalty, but you will pay taxes – potentially lots and lots of taxes. The reason for this is that you are probably at a low income tax rate now, but your withdrawal is considered like a salary again, and will be at the highest tax rate that applies to your total income.

      So, it is generally better to withdraw small amounts as late as you can from IRA accounts in order to minimize the taxes and allow the accoutn to grow.

      And, if you are drawing social security benefits, this withdrawal will make more of your social security benefits taxable.

      There is a good website with advice for this – www.irahelp.com

      Good luck.