Keep in mind that a 401k is a retirement plan! It is intended for your retirement. So the IRS has designed the 401k withdrawal rules to make it hard for you to use the money for other purposes.
Normal withdrawals may begin after age 59 1/2. Normal income tax applies to these withdrawals.
It is possible to make a 401k hardship withdrawal. A hardship withdrawal is not a 401k loan. You cannot repay the money. The withdrawal will be subject to taxes, and possible penalties.
There are two types of 401k hardship withdrawals. The first is a financial hardship withdrawal. This type of hardship withdrawal is subject to income taxes and also 10% 401k early withdrawal penalties if you are under 59 1/2.
Some reasons you might be able to take a financial hardship withdrawal:
*To purchase a primary residence.
*To avoid foreclosure on or eviction from your primary home.
*To pay for college tuition that is dues within 12 months for you or a dependent.
*To pay medical expenses for you or a dependent that will not be reimbursed.
*To pay for funeral expenses.
*For repair of primary residence.
The second is a penalty-free withdrawal. This is also subject to income taxes, but there is no penalty.
Some reasons you might be able to withdraw money from your 401k penalty-free:
*If you become completely disabled.
*Debts from medical expenses are in excess of 7.5 percent of your adjusted gross income.
*You ordered by a court to surrender money to a former spouse, child, or dependent.
*You leave your job by being laid off, fired, quitting, or retiring early, and you are 55 or older, or it is within the year that you turn 55.
*You leave your job and set up a schedule of payments for roughly equal payments to last through your life expectancy. These payments must continue for at least 5 years or until you reach age 59 1/2 (whichever is longer).
Your employer is not required to offer either type of hardship withdrawl. So you will need to talk to your employer to find out if one of these is available to you.
At 70 1/2 years old, what is the percentage that I have to take out?
Comment by mary hirsch — April 15, 2007 @ 1:43 pm
At 70 1/2 years old, what is the percentage that I have to take out?
I’m assuming the answer would apply to both 401K’s as well as my IRA, yes?
Comment by mary hirsch — April 15, 2007 @ 1:45 pm
I would like to withdraw $1800.00 to pay off a loan with the intent to increase the amounts that I currently have taken out of my check. Will there be a penalty?
Comment by Mary — September 28, 2007 @ 11:03 am
CAN YOU TAKE MONEY OUT OF YOUR 401K TO INVEST IN A CD(9-MONTH) WITH OUT PENALTY?
Comment by DARLENE — October 23, 2007 @ 11:13 am
I am needing to withdrawal from my 401k to keep me from losing my home. My boss said since I have not contributed to it this year I can not withdrawal any. Is that true
Comment by Kathy — December 12, 2007 @ 5:37 pm
Kathy, I have never heard of such a thing. I am not an expert, but I think that is BS!!!
Comment by Rob — December 13, 2007 @ 8:40 am
If you can cash 401k at age of 71 what is the percentag of taxes to be paid.
Comment by Cottie Gorham — October 12, 2009 @ 2:18 pm
I am 62 and need funds for a down payment on a home. I always thought after 59 and a half that I could obtain funds from my 401K but the company now tells me I have to wait until I am 65. Does not seem right.
Comment by Steve Welch — October 20, 2009 @ 10:49 pm
It’s quite obvious that you are going to get a “penalty” if you premature use the money from your 401k. Use it after you are retired – if you need money before that, why not try and make some extra from the various work at home opportunities that can be found online.
Comment by Make Money From Home — November 21, 2009 @ 2:28 pm
Make a good use of your money when you retired.
There are lots of work at home jobs that could help you earn extra money. Join more Internet forums so you could get more ideas
Comment by Linda @ work from home canada jobs — December 10, 2009 @ 10:07 am
There’s a bigger salary from working online, and you could be a lot prepared when you retired.
Even senior citizens could work at home through Internet jobs. We could call it work and they could earn money, we could call it hobby so they would feel good and happy.
Comment by Noel @ Make Money at Home — December 12, 2009 @ 7:44 am
At age 60, is lump-sum withdrawal possible to 401k? How much would be the total amount that I will get?
Comment by Ayen — March 23, 2010 @ 10:52 pm
I got laid off November 2008 at 62 from a small company. The Company will not give me my 401-K. Can a Company do that, make their own rules? What are my options now? Help please! Thank you.
Margaret
Comment by Margaret Kiel — April 6, 2010 @ 6:56 pm
WOW What a wealth of information. Thank you so much for compiling this info for me.
Comment by Jamz Products — July 28, 2010 @ 1:04 pm