Withdrawal From 401k

Frequently Asked Questions

1. QUESTION:
   Would allowing a one time limited amount withdrawal from 401k plans without penalties be helpful to economy?
   In the present economy, what would be the impact of allowing folk a one time withdrawal from their 401k plans without the penalties to pay down debt, catch up behind payments, do home repair or to make targeted purchases to help stimultate the economy. I’m thinking a maximun of 20% of their present balance. And write into law that this can only be done during national emergencies and only in 10 year time spans.

   • ANSWER:
     Doesn’t that just delay the problem – so instead of not having any money now, you don’t have any money for later in life? The problem I see with it is that it does not force people to take responsibility for their finances now. If you are living beyond your means, you need to come up with a plan and budget to live with the money you make. People are so used to having everything that sacrifice, work, and budgeting are forgotten concepts. It may not be easy now, but if everyone who are having these issues addresses the probelm and takes responsibility, it will only help in the long run. Bailing people out in the short term does no good.

2. QUESTION:
   What penalties would I incur if I withdrawal from my 401k after tax monies?
   Here is my question. Say I want to withdrawal a certain amount of money from my 401k after tax money, would I have a penalty in doing so? I am not knowledgeable about this and looking for info.

   • ANSWER:
     You would pay taxes on it at your regular tax bracket rate, and if you are under 59 1/2 and don’t meet certain exceptions for using the money (first time home buyer for one, medical expenses for another, etc) there is an additional 10% penalty that you would have to pay on top of the tax.

3. QUESTION:
   What is for first-time homeowner – withdrawal from IRA or loan from 401K?
   I can borrow ,000 from my 401k for my new home. What I am wondering is – is it better to borrow ,000 from my 401k and then take an early withdrawal ,000 from my Roth IRA, or is it better to borrow ,000 from my 401k? It is a first home so there should be no tax penalties associated with either method.

   Thanks -

   • ANSWER:
     Depending on how long you’ve had the Roth IRA, you may be able to withdraw some or all of that without paying taxes.

     Since the ,000 is being borrowed from you and payed back to you (with interest), I’d go that route, unless you can withdraw the ,000 tax-free from the Roth. Then it is your call

     The other consideration is the monthly payment – you’d reduce your monthly repayment by around 0 if you can withdraw the ,000 from your Roth tax-free.

     Best wishes!

4. QUESTION:
   Hardship withdrawal from 401k for down payment on a home?
   I am 36 years old and I have about ,000 dollars in my 401k. I am interested in buying a friend’s house (0,000), but I don’t have the savings for a down payment. I can take a ,000 hardship withdrawl from my retirement. How would this money be taxed (at what percent and when are the taxes paid?) Could it be offset by first time buyer income tax breaks? Are there other options available that would not require a down payment and keep my retirement intact??

   • ANSWER:
     You take a 20% hit up front and get 1099ed as taxable income. All 401ks have the ability to withdrawl up to half of your 401k (up to 50k I believe) for the purchase of a primary residence without a upfront penalty.

     Talk to your 401k rep at your company.

     Regards

5. QUESTION:
   Does it makes sense to withdrawal from your 401K to pay your mortgage?
   I’m a 30 year old male with 000 in ten mutual funds in a 401K and have a 000 mortgage (1 of 2). I’m paying 8.25% on my mortgage and this last quarter lost 3% on my 401K, an anomoly. Still, does it make sense to pay an early withdrawal fee and pay off my mortgage?

   • ANSWER:
     No, premature withdrawals from a 401k are almost always a bad idea. The tax laws are an almost impossible hurdle to overcome. You would have to pay federal and state taxes plus a 10% penalty on the withdrawal. The exact amount you’ll lose to taxes and penalties depends on your individual situation, but it’s fairly certain to be at least 25% of the amount you withdraw and very possibly over 40%. In addition you lose any profits you would make by leaving the money in your 401k.

     So you are starting with a 25%-40% loss on your withdrawal and trying to find a use for the money that makes it all worthwhile. Saving 8.25% interest on a mortgage just doesn’t make up for the huge hit you’re taking upfront.

     Circumstances may force you to take a withdrawal, for example if you’re likely to lose your house to foreclosure. But, if you aren’t forced to withdraw from the 401k, you are almost certain to be better off leaving it alone.

6. QUESTION:
   What is a Profit Sharing Entitlement Withdrawal from a 401k?
   On my employer’s 401k website under Loans/Withdrawals it lists an amount for me that I can access. Can I just withdraw the $ and not be taxed or penalized?

   • ANSWER:
     if you take a loan you can do so without taxes and penalties but you will have to pay it back based upon a maximum payback period of 5 years. the interest rate would typically be prime +0,1, or 2%. Prime right now is at 5%.

     Any type of withdrawal (different then a loan in that you don’t pay it back) will be taxed and if you’re not over age 59 1/2 will likely result in a 10% penalty. Further, withdrawals for contributions that YOU have put in are limited to withdrawal only for hardship purposes.

7. QUESTION:
   can I take an early withdrawal from 401k to pay delinquent taxes and not pay penalty?

   • ANSWER:
     Your company’s plan might or might not let you take an early withdrawal if you still work there. But if they do, you’d owe the 10% penalty if you’re under age 59-1/2.

8. QUESTION:
   I took a withdrawal from my 401K in 2008 and am wondering how much is taxable?
   Over the course of the last 5 years I have taken out a few loans on my 401K and have paid after tax interest of appoximately 00. My withdrawal in 2008 was 00. Does this mean that only 0 will be taxable? All contributions are pretax. The tax on the loans was after tax. Thanks

   • ANSWER:

9. QUESTION:
   When i make an early withdrawal from my 401k, can I elect to not have taxes taken out?
   Lets say I have, 14,xxx in my 401k. If i were to get fired or leave the company, I know the company will most likely give me the option of what to do with my 401k. If i request a check, can i elect not to have taxes taken out? I know i have to pay taxes eventually but I wonder if I can just deposit it into my checking account and payoff some credit cards. thanks!

   • ANSWER:
     Normally, when you receive 401k payments early, the taxes are automatically taken out because there is a ten percent penalty that you will already be paying for taking the money. There is no way to elect no taxes be taken. I separated from my company two years ago, and received all monies in my pension and 401k. To elect no taxes was not even an option.

10. QUESTION:
    If I take an early withdrawal from my 401k and pay the penalty, does this mean I would owe money?
    Do I owe money on my income tax return?

    Do I need to pay the withdrawal back or is it mine to keep?

    • ANSWER:
      Unless you’ve left your employer, there is NO EARLY WITHDRAWAL. You can quit contributing to it.

      You will owe 10% early withdrawal penalty, then state & federal taxes.

11. QUESTION:
    Can my wife take a hardship withdrawal from her 401k for my(spouses) education?
    I am going back to school, and have government loans to pay. But instead of these loans – can my wife take a hardship withdrawal to help pay off loans, and other college expenses that my loans do not cover?

    • ANSWER:

12. QUESTION:
    how do I make a withdrawal from my 401k/IRA and how long does it usually take?

    I am not employed either. Do I get taxed or anything for taking money out? Is it considered a loan?

    • ANSWER:
      First, what is your hardship?

      http://www.guideto401khardships.com/

      Read through all this (including the links) carefully.

13. QUESTION:
    Anyone make a hardship withdrawal from 401k with fidelity for home repairs…anyone been denied? if so, why?
    We need a new furnace/air conditioner, the furnace is very old and is deemed dangerous by the furnace repair man that was here yesterday…We also have had a leaky pipe that damaged our kitchen, which will entail, drywall, new cabinets, flooring, etc…would these repairs be acceptable for the hardship withdrawal?

    • ANSWER:
      You really don’t want to borrow from your 401k anyway. Taxes and penalties are crazy and even if you take a loan out against it it would be due in full if you were to get fired, laid off, or quit. If you don’t have the money to pay it back then you get hit with penalties and taxes.

      Like the other person said. Save up the money and pay for it. That’s always the best way to go.

14. QUESTION:
    Can I take a withdrawal from my 401k for a first time home purchase penalty free?
    I know I will need to pay taxes but I am wondering about additional penalties.

    • ANSWER:
      Unfortunately, the first time homebuyer exception to the 10% penalty for early withdrawals applies only to IRAs, not 401(k)s. The whole distribution amount will be included with your other income and taxed at whatever rate your total income dictates. In addition, there is a 10% penalty for early withdrawal.

      Please see the details below…..from IRS website

      http://www.irs.gov/taxtopics/tc558.html

      Additionally, most 401(k) plans don’t allow early distributions except for certain emergency situations such as to pay medical bills that exceed 7.5% of your AGI or if you become totally and permanently disabled. Routine early distributions for any other purpose are prohibited as long as you are still employed by the plan’s sponsor. In most cases you’d have to quit your job to take an early distro for a home purchase.

      What you MIGHT be able to do with a 401(k) is take out a loan from the plan. Not all plans allow this but it is certainly worth asking. You’ll have to pay interest on the loan but the interest is paid straight back into the plan so you’re just paying yourself. The drawback to this is that if you leave the employment of the plan’s sponsor you will have to immediately repay any outstanding balance or it will be re-classified as an early distribution and will be subject to tax and the 10% penalty.
      /

15. QUESTION:
    Filing taxes on my 401k withdrawal from my 1099-R?
    When adding the amount I withdrew from my 401K to my income do I use the amount of the withdrawal or the “:taxable amount” and can I still use the 1040EZ?

    • ANSWER:
      You will not be able to use Form 1040EZ. You will file on a form 1040. It has a place to list both gross amount received from the 401K, then the taxable amount. Note, if you have a code 1 distribution, a 10% penalty will be assessed on the taxable amount.

16. QUESTION:
    Can a non employee take an early withdrawal from their 401k?
    if they no longer work at their place of business?

    do you need a reason to take it out?

    • ANSWER:
      If you make a withdrawal prior to age 59-1/2 you will be subject to a 10% early withdrawal penalty and the amount will be subject to income taxes.

17. QUESTION:
    What is the penalty for early withdrawal from your 401k?
    What % will I be penalized?

    • ANSWER:

18. QUESTION:
    401k LOAN (not withdrawal): will I get tax statements from employer, will I owe taxes?
    After doing a lot of research (some of it on YA!) as well as actually making a 401k withdrawal, I have a pretty solid understanding of the tax ramifications of making a withdrawal from my 401k. The 20% withheld to begin with, which is meant to go some of the way toward covering the actual: 10% penalty, plus tax at my regular tax rate.

    Ok but now my question is about loans. I’ve gotten them before ) 401k loan, and I pay it back to myself (with interest). I’ve never heard about having to pay taxes on this, (since it’s neither income nor an asset), nor getting a tax statement from my employer.

    I just got one, though, and the paper looks different, there is a bit of mention in regard to taxes. I think maybe it is just general, boilerplate language they put on every communication that has to do with getting $ from 401k.

    But am I right that generally speaking, a 401k LOAN -one that you immediately start making payments on, and pay back to your own account with interest, that’s not taxable nor otherwise penalized? (assuming you stay employed and pay back in full of cousre) ?

    • ANSWER:
      You are right that generally a 401(k) loan is a non-taxable event. It becomes a taxable distribution if you default on the loan or are unable to immediately pay the balance of the loan if required to do so for events like separation from your employer, etc.

19. QUESTION:
    Is there a new rule that allows withdrawal from 401k at 55 after 30 years with one company, without penalty?

    • ANSWER:

20. QUESTION:
    What are the penalties for early withdrawal from a 401k?

    • ANSWER:
      If you are under age 59.5, the penalty is 10% of the withdrawal. As with all withdrawals, the amount will also be taxed as ordinary income.

      If the purpose of your withdrawal is to retire early, IRS code 72(t) allows you to withdraw a stream of income in “substantially equal payments” without penalty. Most financial advisors will be able to help you with the calculation at no charge.

21. QUESTION:
    Hardship withdrawal from 401k?
    I’m currently a college student, and for the summer I have not been able to find any type of employment. I have applied everywhere in town that is hiring, and in 2 months I haven’t heard back from anything. My bills are coming due, and I’m out of savings. I have 401k’s from two previous employers, and I was wondering, is it possible to withdrawal funds from a 401k because I’m not able to find a job? And if so, would this qualify as a hardship withdrawal?
    I’m sorry, but I don’t want to hear any “Don’t do it! It’ll hurt your retirement!” answers. I’m fully aware of the implications towards future retirement plans, however, the here and now, and being able to pay my bills and rent, come first. Once school starts up I’ll be just fine. I have student loans, financial aid and VA benefits to pay for my tuition and all of my bills. I just don’t know what else I can possibly do for the next 2-3 months as I haven’t been able to find any type of summer employment.

    Thanks

    • ANSWER:
      Like loans, hardship withdrawals are allowed by law, but your employer is not required to provide for them in your plan. Again, most companies do, but some don’t. The cost of administering such a program can be prohibitive for many small companies. Check with your Human Resources department if you’re not sure if your plan allows hardship withdrawal. Like loans, your employer must adhere to some very strict and detailed guidelines.

      The IRS code that governs 401k plans provides for hardship withdrawals only if: (1) the withdrawal is due to an immediate and heavy financial need; (2) the withdrawal must be necessary to satisfy that need (i.e. you have no other funds or way to meet the need); (3) the withdrawal must not exceed the amount needed by you; (4) you must have first obtained all distribution or nontaxable loans available under the 401k plan; and (5) you can’t contribute to the 401k plan for six months following the withdrawal.

      The following items are considered by the IRS as acceptable reasons for a hardship withdrawal:

      1.Un-reimbursed medical expenses for you, your spouse, or dependents.
      2.Purchase of an employee’s principal residence.
      3.Payment of college tuition and related educational costs such as room and board for the next 12 months for you, your spouse, dependents, or children who are no longer dependents.
      4.Payments necessary to prevent eviction of you from your home, or foreclosure on the mortgage of your principal residence.
      5.For funeral expenses.
      6.Certain expenses for the repair of damage to the employee’s principal residence.
      Hardship withdrawals are subject to income tax and, if your are not at least 59½ years of age, the 10% withdrawal penalty. You do not have to pay the withdrawal amount back.

22. QUESTION:
    Hardship Withdrawal From 401k For Moving Into New Place?
    I have a 401k from my old employer (previous employer went through an acquisition, now working for new employer). I am eligible for a hardship withdrawal, but my question is, can I use my hardship withdrawal to fund moving into a new place? The reason I want to move is simply because I do not feel safe in my current apartment. The neighbors are not good news, within the last 3 months, 2 residents have been arrested for drug related crimes and we have had several break-ins within the apartment complex. We are out of lease, but I just dont have the money to drop down for the deposit AND first months rent and other misc moving expenses at the time. My 401k states I can use the hardship withdrawal to prevent eviction. I plan on calling my provider (Fidelity) first thing tomorrow, but I was just curious if anyone on Y! Answers had any insight to this issue. Thanks in advance!

    • ANSWER:
      You don’t qualify for a hardship withdrawal to pay your moving cost. What you can do is “borrow” the money for 60 days. You need to roll the 401K into an IRA first. Then you can withdraw the money without any taxes withheld. You have 60 days to put the money into another IRA without any tax consequences. If you go past the 60 days, you have to add the IRA money to your income and pay taxes at your marginal rate and pay a 10% penalty.

      I hope this helps.
      Gary

23. QUESTION:
    If i made some early withdrawal from my 401k, is it tax deductible?

    I just checked a letter that they sent me (it’s not a form) and it looks like some tax have been taken off already. I withdrew about ,500 and only got about ,900. So, is this tax deductible or not?

    • ANSWER:
      No. it is the reverse-you must pay tax and a 10% penalty on a premature distribution from your IRA or 401k. There are exceptions to the penalty in certain cases.

24. QUESTION:
    Making a withdrawal from 401K?
    My husband is in the process of filling the form out to withdrawal from his 401K. For the reason he put to prevent eviction. We own a house and we are having trouble paying not just the house bills, but all of our bills. He is asking for 00. I know as far as paper work and rules that he is eligible for the actual withdrawal, but how do we prove that we are in a tough situation as far as paying everything?
    We haven’t actually gotten a foreclosure notice….I don’t know why it says eviction (isn’t that for renters)?
    Anyway can someone help me with this? He asked me to mail it tomorrow, but I know they will need some kind of verification or proof.
    What can we show them?….it’s simply a combination of things.
    We had a situation this summer which caused us to be behind ever since.
    We are not actually 00 behind in mortgage, just wanted the funds to get caught up with our mortgage and bills….we ARE behind in our mortgage payments though.
    They have already sent the form for us to sign. It just says something about verifying this…and I have no idea how to verify a multiple of situations…..because it’s not solely a mortgage problem.
    well then tell me what ARE we supposed to do?? Make too much money for government assistance. Not enough to get back on our feet.
    As I said, a situation came up this summer and we have been behind ever since.
    What are we to do??

    • ANSWER:
      Your husband’s employer will probably require some documentation that you’re behind on your mortgage payments. To prove this, send them a copy of the last mortgage bill you received showing an overdue balance. You should also show that you have no other cash or assets to draw from. You can send them a copy of your most recent bank account statement to show them this is true.

      For what it’s worth, remember that you’re taxed on 401(k) withdrawals, and you also must pay a 10% early withdrawal penalty if your husband isn’t 59 1/2 years old yet. So a withdrawal of ,000 might mean you are mailed a check for ,000 after taxes and the penalty.

25. QUESTION:
    Taking a withdrawal from 401k for home purchase?
    My husband and I are looking to purchase our first home. He has a small amount in a 401k from his part time job (he’s currently in school). If we withdrew ,000 from it to aid in the home purchasing process, would that be worth it? We are still young (25 & 28) so we are no where near retirement yet. I understand that there would be the 10% penalty and we’d have to pay income taxes on it. We usually receive a decent refund anyways, so that wouldn’t really be too much of a burder in the long run. Is there anything I may be missing if we were to take out an early withdrawal?

    • ANSWER:
      If your husband still has the job, he can’t take a withdrawal. He can probably get a loan for some of the money in the 401, but it would have to be paid back.

      Some plans have a hardship withdrawal, but no one *needs* a house.

26. QUESTION:
    How long does it take to withdrawal money from my 401k? It is for a hardship?
    I need a hardship loan and my 401k is my only choice. How long would it take to get the money?

    • ANSWER:
      It depends. As little at two days and as many as 6 weeks.

27. QUESTION:
    Whats the difference between hardship withdrawal and loan from 401K plan?
    Im over 62 and want to take the money out but im still employed. Which is best to take money out?

    • ANSWER:
      Well, if you’re over 55 1/2 you don’t need a hardship withdrawal to take money out of your 401k without a penalty. All you’ll do is recognize the money you take out as income. If you don’t want to take it as income, you certainly can take it as a loan which has a repayment provision. How long are you planning to work at your current place of employment? Most places will require you take any loans as income immediately (if you’re over 59 1/2) so it would be a moot question is you are going to plan to retire relatively soon.

      That said, given your age, you’re also not going to get a whole of return on the money you put back just because of the time value of money.

      So, I would suggest there’s no risk of you taking the money unless by doing so it would change your tax bracket. If you expect to retire in the next several years and you can pay the loan off in that time and then the 401k will be a primary source of income you can consider a loan as the tax impact will likely be lower then than now.

      Hope that helps and good luck.

28. QUESTION:
    What would the taxes and penalties be on an ,000.00 withdrawal from a 401K in California?

    • ANSWER:
      First you have to pay federal ordinary tax, so it depends on what tax bracket you’re in

      0 – k – 10%
      k – k – 15%
      and so on up to 38%

      Then there is the 10% penalty of ,000.

      Then you have to pay California income tax, so that’s another 5% – and if you’re in one of the cities with tax, you have to pay that too.

      So, you will probably pay ,000 in taxes for an ,000 withdrawal – I’m sure there is a less expensive way for you to get k.

29. QUESTION:
    what are the circumstances to make a hardship withdrawal from your 401k?

    • ANSWER:
      The following items are considered by the IRS as acceptable reasons for a hardship withdrawal:

      + Un-reimbursed medical expenses for you, your spouse, or dependents.
      + Purchase of an employee’s principal residence.
      + Payment of college tuition and related educational costs such as room and board for the next 12 months for you, your spouse, dependents, or children who are no longer dependents.
      + Payments necessary to prevent eviction of you from your home, or foreclosure on the mortgage of your principal residence.
      + Beginning on January 1, 2006, you will also be able to make a hardship withdrawal for funeral expenses and repair of a primary residence.

30. QUESTION:
    Early 401K withdrawal-paying the penalty fee upfront with the 20% tax?
    I need to do an early withdrawal from my 401K-cash out. I understand that they will automatically deduct 20% for tax purposes. My question is that can I have them take the additional 10% penalty fee along with the 20% at the same time so I don’t have to worry about the penalty fee when tax time comes around? It is necessary for me to withdraw from my 401K at this time due to some hardship.

    • ANSWER:
      You will have to speak to your 401-K administrator. They should be able to take 30% out instead of the 20%, but each administrator has it’s own set of rules.

      If they do not take the 30% out, you can calculate the 10% amount and send that amount to the IRS with a 1040ES form. Look at www.irs. gov – click on forms – and you can print out the form needed to mail in your payement.

31. QUESTION:
    Can I (Could I) file for the 401k withdrawal separately from regular taxes?
    Last year we ran into some financial problems and had no other option but to do an early withdrawal from our 401k (TSP). We did get the normal 10% penalty but no taxes were withheld. Now we are a bracket up and the amount of taxes due is completely out of my reach. Which I don’t really get, I make a financial hardship withdraw and it doesn’t get taxed at the time of withdraw so that I can be taxed at a higher rate? Not fair. Anyways, I was wondering if there was any possible way to tax the withdraw by itself (I’ve read in different places it’s 20%) and save approx. ,000.00? Thanks.

    • ANSWER:
      The tax owed on it would depend on your current income tax bracket.

32. QUESTION:
    How much money would I have to pay in Taxes on a withdrawal from my 401k?
    Last year I made about ,500 in income. I currently have about ,000 dollars in my 401k. I know its a bad idea and inadvisable to withdrawal from your 401k, but to soothe my curiosity, how much would I have to pay in taxes if I withdrew all ,000? I know there is a big penalty fee for withdrawing early, and that the taxes they take away are massive, Im just very curious. If it helps, I live in Texas, so we don’t state income tax (not sure if that applies for a 401k withdrawal though)

    I did have another question in response to an answer. Since ,400 would be retained by the custodian, is that a fee to THEM or is it just held until your taxes are due? Does it count toward what I would pay come tax season?
    Im just asking to see what would be paid in taxes. Would it just be an additional 0 (after the ,400 is withheld) come tax season? Or an additional 00 during tax season (after the ,400 is withheld)?
    Sorry Im kind of dense, this is why I wanted to ask online.

    • ANSWER:
      The withdrawal is subject to a flat 20% withholding towards your eventual tax liability. It’s NOT 20% for tax plus 10% for the penalty as another response suggests. The custodial will withhold ,400 on k and will cut you a check for ,600.

      The tax will depend upon your total income for the year. If your 2011 income is also k, most if not all of the k will fall in the 15% bracket. You’ll also owe a 10% penalty. Therefore your total hit will be roughly 25% or ,000. Since only ,400 will have been withheld form the distribution, you’ll owe an additional 0 at filing time. If your refund is typically greater than 0 you’d be covered if you didn’t change your withholding. If it’s typically less, you’ll likely have a bill to pay at tax time so be SURE to set aside enough to cover that.

      All of this assumes that you are even allowed to withdraw the funds. Most 401(k) plans do NOT allow in-service distributions except for limited emergency situations. If you don’t meet one of the plan’s tests for an in-service distribution (check with your plan administrator or review the plan docs) you’ll have to quit your job in order to take the distribution at all. I know one person personally who worked a “deal” with his employer to resign to take a distribution and be re-hired the following day, only to have his employer back out on the deal. His employer was planning on a couple of layoffs and saw that as a perfect opportunity to cut a body without taking an unemployment hit. His unemployment was denied initially and upon appeal and he had a couple of rough months until he found a new job.

      Edit: The tax withheld is paid over to the IRS. It’s no different from withholding taxes from your wages. You’ll get a Form 1099-R at the end of the year that will show the gross distribution and the amount of tax withheld. You’ll use that information to prepare your tax return and pay any added taxes due.

33. QUESTION:
    What is the minimum withdrawal from 401K at age 72 1/2?

    • ANSWER:
      ,906.25 IF you have exactly 0,000 in your 401k & you have designated no beneficiary. I used this easy number of 0k so you could extrapolate from this. Below is the link to calculate exactly:

      But of course you’ll have to start minimum distributions at age 70.5 & your withdrawals are taxable at your then current income tax rate.

34. QUESTION:
    What are the actions for making a 401K withdrawal?
    I am thinking about making a withdrawal from a 401K to make other investments. I was just wondering what kind of penalties are typically involved or what will happen on my taxes.

    • ANSWER:

35. QUESTION:
    early withdrawal from 401k in iowa?
    has anyone done this and could you give me the bottom line? my 401k isn’t large and i’m no longer eligible to contribute/receive a match, so i want to pull out but want more info if possible. anyone NOT from iowa is welcome too, i will welcome the federal info at least! thanks.
    i am now going to school and there is a provision in my plan to reduce the penalty if you have tutition and room and board expenses in the next 12 months (which is true for me) any experience with this?

    • ANSWER:
      If you don’t keep it in a retirement account, you will lose close to half of the amount that is in there due to the 10% early withdrawal penalty and you’ll have to pay income taxes on the entire amount as well. These are federal items. I don’t know if you have an income tax where you live, but if you do, you’ll have to pay them taxes as well. Unless you desperately need that money, find another retirement account to put it in.

36. QUESTION:
    what is the criteria for a hardship withdrawal from your 401k?

    • ANSWER:

37. QUESTION:
    I’m trying to get a hardship withdrawal from my 401k.?
    This is to prevent an eviction. Will they contact my landlord?

    • ANSWER:
      they wont do that but they should require that you provide proof…ie the letter that your landlord provided you saying you were late on your rent and needed to pay to prevent eviction. That’s all the proof they should need. Without proof they should deny the hardship withdrawal.

38. QUESTION:
    Tax help! Does a withdrawal from my 401K count as a distribution from a “qualifying retirement plan”?
    I am using Turbo Tax free federal to file my taxes. Under Retirement and Investments it states: Enter distributions you received from retirement plans in the following years- 2007, 2008, 2009. The types are Roth IRA, Traditional IRA, and Other Qualified plans. I I rolled over a 401K in 2007 and took a partial withdrawal (paid all taxes, penalties at the time) is this something I should enter in this area of Turbo Tax? I’m unsure because it states “other qualifying plans” I looked at my tax returns from 2008 and can’t find anything showing the answer, although I’m certain they asked me the same question last year.

    • ANSWER:

39. QUESTION:
    Can I make a withdrawal from my 401k at age 24?
    What criteria must I meet in order to make a withdrawal from my 401k? What penalties apply? Does it have to be approved or can I just accept the penalties and do it whenever I want?

    Thanks in advance.
    To withdrawal it’s just the 10% penalty that I have to pay. Yes, I have to pay taxes on the withdrawal amount, but I’d have to pay those at age 60 too, so really I’m only losing the interest I would’ve generated on the amount and also 10% of like 00, since my employer matches $ for $, 00 of that is their money and 10% is 0.

    • ANSWER:

40. QUESTION:
    Can I deduct from my 401K to pay taxes due to the IRS without a penalty?
    I owe the IRS 7K for taxes this year. The money I owe is for taking an early withdrawal from our 401K to fix the bathroom. I’m not sure it counts as a hardship, but the bathroom was mold infested and needed to be gutted everything replaced. Can i take more money out of my 401K to pay the taxes due and not have to incurr another penalty?

    • ANSWER:
      Taking money from your 401k means double tax. You get taxed everytime you borrow. Remember when you pay it back and take it during retirement, you get taxed again!

41. QUESTION:
    I want to purchase a house. Can I get a hardship withdrawal from my 401k for the full purchase price?
    I am allowed to withdraw up to ,000 from my 401k for a hardship. One of the situations that allow an individual to make a hardship withdrawal is for the purchase of a primary residence. However, I am confused on the wording used. I want to know if, since I am eliglble to withdraw up to ,000 and the house I want to purchase is only ,000, will I be allowed to withdraw that amount, or will I only be allowed to withdraw the amount to cover the down payment and closing costs?

    Please, any information would be appreciated. I do not want to get my hopes up, if I am not going to be able to do it.

    Thanks, Rhonda
    A 401k loan is not an option at this point. My question is will the hardship loan cover the ENTIRE purchase of the house since I am allowed to withdraw up to 39,000, or will it only cover the down payment and closing costs?

    • ANSWER:

42. QUESTION:
    Is there a limit to the number of times you can take a hardship withdrawal from your 401k?
    I took a hardship withdrawal in december 2007 from my 401k to prevent forclosure and now since my student loans have begun repayment, the gas prices and everything have increased I’m finding myself behind on my mortgage again just to keep food on the table and to be able to drive to and from my current job. Does anyone know if there is a limit on the number of times I can take a withdrawal to prevent foreclosure or if a certain amount of time has to pass before you can do it again? I am currently looking for a second job, but with the economy being what it is, I’m finding it hard to find one and until I do I just can’t catch up.

    • ANSWER:
      Hi,
      I used “Credit Solution” to settle my debt and avoid foreclosure.They managed to reduce my debt up to 58% .It’s legitimate.I came across this company on NBC News Special Edition.Check it out here:

      http://shurl.net/5oX

43. QUESTION:
    how many times can you withdrawal from your 401k money?

    • ANSWER:
      This depends on when you are talking about. If after retirement, you can set it up to be paid out in monthly installments, or in a lump sum, or some other arrangement.

      If you are still working…it depends on your particular companies plan , and realize there will be tax penalties in addition to it counting as income.

44. QUESTION:
    How can I withdrawl my funds from my 401k?
    I owe roughly 80k on my credit cards. I’m tired of making payments which will only cover int. I was hoping to pay them off by making a withdrawal from my 401k. I had already taken the maximum allowable loans available. I tried calling to them askedif I could make the maximum allowable withdrawal, but they say paying credit cards is not a hardship. Well if I can’t pay them off, I might have to file for bankruptcy. Any help or advice would be greatly appreciated. Looks like the only way for me to do the withdrawal is if I quit my company.. I can quit my company and pay most of my credit card, but then I’m out of a job????

    • ANSWER:
      If you make the withdrawl, you will pay a penalty (usually about 10% of the total amount) on top of any taxes payable on the principal and interest taxed at ordinary income rates. It’s a tough decision to make because you are losing all that savings and being penalized.

      Can you negotiate with your credit card companies and lenders first to work out a payment plan? Try talking to some debt counselors first before you make this rash decision.

      But be careful many debt counselors may be trying to profit from your problems. I am attaching a link to the FTC website that talks about debt management agencies.

      http://www.ftc.gov/bcp/conline/pubs/credit/fiscal.shtm

45. QUESTION:
    Can I make a penalty free hardship withdrawal from an old 401k while I’m on strike?

    • ANSWER:
      You need to check with your employer’s HR dept or the 401k administrator. Different employer plans have different requirements. Might be difficult to arrange if you’re on strike.

      Usually you have to be on the verge of actual foreclosure to get funds from the 401k. Even if the 10% early withdrawal penalty is waived, you will still have to pay the income taxes.

46. QUESTION:
    on which line of the form 1040 do you put a withdrawal from your 401k?

    • ANSWER:

47. QUESTION:
    How can I get the early-withdrawal penality waived from withdrawing on my 401K early?
    I have a medical and financial hardship — lost my job and have to pay for medical expenses for a health problem that recently came up. My former job insists that I have to pay the penality on withdrawing my 401K early.

    Would my situation qualify as a hardship that would waive the early-withdrawal penalty? How do I get this waived? What do I do if my former job still does not accept this waiver?

    • ANSWER:
      You can’t. This is not a decision made by your former employer, this is a federal rule being enforced by them. Funds in your 401K are for your retirement, not an emergency. For an emergency you should have had an emergency fund. Also, it is unlikely you would be able to take out a loan as you obviously do not have the means to pay it back.

48. QUESTION:
    what constitutes “early withdrawal” from a 401k?
    I am retiring (July 31st…age 66) and the money would come in handy right now. So I am trying to calculate the taxes & potential penalties for cashing-in the 401k.

    Thanks,
    D.J.

    • ANSWER:

49. QUESTION:
    how long does it take to get a 401k Hardship withdrawal check from Nationwide?

    • ANSWER:
      1. They have to sell your securities.
      2. They have to wait for those funds to clear
      3. They have to process a check for you
      4. They have to mail it.

      This all could take about 2 weeks.
      /.

50. QUESTION:
    Can I make withdrawal from traditional IRA after rolling over from a 401k?
    I plan to rollover my 401k from my company after I leave into an IRA. Is there a time limit before I can withdrawal money from the IRA? I was going to pay for my wifes schooling with that money (and avoid the extra 10% penalty). I know I will pay taxes on the withdrawal it but I’m just curious if there is a time limit before I can do that or some other restrictions.

    Thanks
    David M: Sorry but I don’t think you understand completely. I can avoid the “penalty” if the money is used for qualified education expenses. At that point I just pay the taxes and it’s a wash.

    • ANSWER:
      there is not a time limit that you have to follow to take advantage of that exception. What you will want to be careful to do is take only exactly what you need and turn around the same day you deposit the check from your IRA….write a check to the educational institution in exactly the same amount. you want to avoid the appearance that the withdrawal money is being used to fund something other than educational expenses.