Quote:
Originally Posted by forgot to bid
Absolutely.
Want me to tell you how I did it this past summer?
$2500 401K from a car dealership. Never did anything with it as I had plenty in other 401Ks. To roll it into one of the others would've been silly for two reasons a) I needed the money to help offset $8K in unexpected home and car expenses in a span of 30 days this past summer and b) I lose more than $2500 sometimes in those 401ks in a single day.
I cashed it out. Very easy. Very quick. I'd never do it on a 401K worth more than, well, $2500.
My brother used to have one of those six figure salaries in pharma (oxycotin), that went to 0 three or four years back. He was underemployed for a while and eventually had to cash out of a 401K to save the house and never paid taxes on it because of all the other losses.
It's a 10% penalty and they withhold taxes on it.
OK - I'll quit toying with you.
You (and apparently your brother) were able to cash that out ONLY because you (and your brother) no longer worked there. Had you still been an active employee of the car dealership, IRS regulations prohibit you from withdrawing the elective deferrals you made to the plan until you a) reach age 59 1/2, or, b) qualify for a hardship withdrawal. You are permitted under certain circumstances, if the plan permits, to withdraw the contributions your employer made, but not those you made. And since for most of us, our 401(k) primarily consists of money we've contributed, most of us have a substantial restriction on our ability to "cash it out" while employed.
So, the contention that the two of you have been making that anyone can withdraw their money so long as they pay taxes and penalties is flat wrong.
07-01-2023
AIRLINE
