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If i am 591/2 can i get all my 401 will i be charged anything? |
If i am 591/2 can i get all my 401 will i be charged anything? Do you have a 401(k) plan or a 401(a) plan? The answer will depend on that answer. 1. Everyone addressed your question correctly if you have a 401(k) plan. If you are still working earning income and then add that on top of income. I am afraid that you will regret it at tax time as all of it becomes ordinary income suject to a potentially higher tax bracket. Consider setting up a periodic distribution if your plan permits them, and take what you need. Many set periodics up montlhy, quarterly, annually depending on the financial need. 2. If you have a 401(a) plan then the answer could be very different than above. There are typically two types of 401(a) plans. The first is a Profit Sharing Plan where you did not contribute to, but the employer made discretionary contributions on your behalf based on company profits. The second type is a Money Purchase Pension Plan. Again the company made mandatory contributions on your behalf annually. These plans may have different requirements at distribution. If you have either of these then go to the benfits area of your employer and request a Summary Plan Description "SPD". The SPD is a laymans terms of the plan options that will include your options for distributions. One important note: If it is a Money Purchase plan the law REQUIRES SPOUSAL CONSENT (if married) to sign off to allow the distribution. Good Luck! Once you turn 59-1/2, you can draw out your 401(k) without being subject to the 10% penalty tax. You will be subject to regular tax on the distribution. Here's a quote from the law: "Virtually all employers impose severe restrictions on withdrawals while a person remains in service with the company and is under age 59陆. Any withdrawal that is permitted before age 59陆 is subject to an excise tax equal to ten percent of the amount distributed, including withdrawals to pay expenses due to a hardship, except to the extent the distribution does not exceed the amount allowable as a deduction under Internal Revenue Code section 213 to the employee for amounts paid during the taxable year for medical care (determined without regard to whether the employee itemizes deductions for such taxable year)." Here's the link: http://en.wikipedia.org/wiki/401k... http://en.wikipedia.org/wiki/401k... You can take all of your 401K out at 59 1/2 with no penalty. You will pay taxes on the funds unless you roll them into an IRA account. It is still taxable income when withdrawn. I would recommend talking to an accountant or whoever helps you with your taxes. You might not want to take it all out at once. |
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