Anyone taking the 10% penalty and cashing out 401k or IRA?
There are several exceptions to the age 59½ rule. Even if you receive a distribution before you are age 59½, you may not have to pay the 10% additional tax if you are in one of the following situations: You are the beneficiary of a deceased IRA owner
Had to deal with this last year….IRS calls it a Non-spousal inheritance (since you mentioned your family, I am taking a guess that the IRA was inherited from a relative).
Not sure on the house situation.
I will be losing my job shortly after the 1st of the year due to a non work related injury. My 401k market value is currently $145000 with $8000 of that vested roth 401k. I have a $28500 outstanding 401k loan that i will not be able to pay off. The vested balance of my 401k is $115000. It looks like i am going to have to apply for social security disability and unfortunatly because of the length of time it takes to be approved and my need for cash to pay bills i will have to default on my 401k. Can anyone tell me after the dust settles what i will end up with?
If you mean what will happen if "default on your 401K loan," that will depend on the taxes in your state added to the taxes on your Federal part of the default. I did not default on a loan from my 401K, though. In my case I paid a total of 37% to cash out my IRA which is what I rolled over my 401K into. And I did not cash it out all at once to keep from pushing our income into a higher tax bracket for a particular year, or it would have been higher.
You're going to take a massive tax hit unless you can show a hardship, which it looks like you can. There is a hardship exemption on some portion of your withdrawal, or there was. You need an accountant to show you how much you can take out at once. You can pay him out of the money you will be withdrawing.
I inherited my dads 401k plan and was told I had to withdraw from the account or rollover in 5 years. I am 24 and live in michigan but I am going through hardships finding work and have no current address or means to make a living. Do I qualify for 10% fed tax hardship or no? And what are the pros/cons of that option. Please help. Thanks
Well my story is that my employer has a retirement plan with Trans America. Options to invest in are few. I've lost $20K in the last 2 months. I called them and found out I can't take the $ out unless I'm 59.5 (I'm not) or I quit (can't do that). They advised me to put it all in New York life insurance co gauranteed interest Acct. to get out of the market completely. That's where they say I'm the safest during this turbulent time. So I did. But is that really the best thing to do? I don't like it to be all in one place and in that type of fund too. It only earns 2.06%. But what other option does someone in my situation have. I guess it's time to talk to a professional. Any advice?
I told mine out last year and I'm glad I did. I cant have someone to tell me what I can do or not do with my money.