What would you like to do?
How much can I withdraw from my 401K at 59.5?
Many plans allow employees to take http://www.answers.com/topic/loan from their 401(k) to be repaid with after-tax funds at pre-defined http://www.answers.com/topic/interest. …The interest proceeds then become part of the 401(k) balance. The loan itself is not taxable income nor subject to the 10% penalty as long as it is paid back in accordance with section 72(p) of the Internal Revenue Code. This section requires, among other things, that the loan be for a term no longer than 5 years (except for the purchase of a primary residence), that a "reasonable" rate of interest be charged, and that substantially equal payments (with payments made at least every calendar quarter) be made over the life of the loan. Employers, of course, have the option to make their plan's loan http://www.answers.com/topic/provisioning-disambiguation more restrictive. When an employee does not make payments in accordance with the plan or IRS regulations, the outstanding loan balance will be declared in "default". A defaulted loan, and possibly accrued interest on the loan balance, becomes a taxable distribution to the employee in the year of default with all the same tax penalties and implications of a withdrawal. Loans are paid back by post-tax monies, so there are substantial tax implications in taking a loan from pre-tax monies. Virtually all employers impose severe restrictions on withdrawals while a person remains in service with the company and is under age 59½. Any withdrawal that is permitted before age 59½ is subject to an http://www.answers.com/topic/excise-1 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). The tax code legally defines hardship as: # Purchase of a primary residence (specifically excludes mortgage payments) # To avoid foreclosure of, or eviction from, primary residence # Payment of post-secondary education expenses for the next 12 months for the employee, his/her spouse, or dependent(s) or beneficiaries # Medical expenses not covered by insurance for employee, their spouse, or dependent(s), or beneficiaries which would be deductible on a federal tax return (e.g. non-essential cosmetic surgery would not be acceptable) # Funeral expenses for the employee's deceased parent(s), spouse, child(ren), or dependent(s) or beneficiaries (as of http://www.answers.com/topic/december-31-1, http://www.answers.com/topic/2005) # Home repairs due to a deductible casualty loss (as of http://www.answers.com/topic/december-31-1, http://www.answers.com/topic/2005) In any event any amounts are subject to normal taxation as ordinary income. Some employers may disallow one, several, or all of the previous hardship causes. Someone wishing to withdraw from such a 401(k) plan would have to resign from their employer. To maintain the tax advantage for income deferred into a 401(k), the law stipulates the restriction that unless an exception applies, money must be kept in the plan or an equivalent tax deferred plan until the employee reaches 59 ½ years of age. Money that is withdrawn prior to 59 ½ typically incurs a 10% penalty tax unless a further exception applies.  This penalty is of course on top of the "ordinary income" tax that has to be paid on such a withdrawal. The exceptions to the 10% penalty include: the employee's death, the employee's total and permanent disability, separation from service in or after the year the employee reached age 55, substantially equal periodic payments under section 72(t), a http://www.answers.com/topic/qualified-domestic-relations-order, and for deductible medical expenses (exceeding the 7.5% floor). This does not apply to the similar http://www.answers.com/topic/457-plan.
Mandatory 20% when you withdraw. There could also be a mandatory state tax withholding as well depending on which state you live. However, that may not be all the taxes you ow…e. The 20% could just be a down payment to the IRS. If you are in the 25% tax bracket then you would owe the extra 5% at tax time. If you are under age 59.5 then you would owe an additional 10% early withdraw penalty.
The taxable amount of the distribution will be subject to your marginal tax rates when the taxable amount of the distribution is added to all of your other worldwide gross inc…ome after your income tax return is completed correctly you will know how would be owed on the taxable amount of the distribution. You are the only one that has all of the necessary information that will have to be reported on your income tax return for the year in order to do the calculation for the numbers that you are looking for. If you would like to do some estimated tax calculations you would need to go to www.irs.gov and use the search box for 1040ES go to page 6 for the 2010 Tax Rate Schedules page 5 has the estimated tax worksheet. You can find the estimated tax worksheet and instructions by using the below enclosed information If you would like to do some estimated tax calculations you would need to go to www.irs.gov and use the search box for 1040ES go to page 6 for the 2009 Tax Rate Schedules and page 5 for the worksheet. http://www.irs.gov/pub/irs-pdf/f1040es.pdf You are welcome to try any of the calculators for some estimates to get an idea of what things may look like after using the correct IRS forms and compare the numbers. Use your search engine and type ESTIMATED TAX CALCULATORS and you will be able to find several of them that you can use for this purpose.
10% early withdrawal penalty on the taxable amount of the distribution plus income tax at your marginal tax rate. If you are separated from the company that has the 401K plan …in or after the year that you turn 55 you will not be subject to the 10% early withdrawal penalty. Without paying the 10% early withdrawal penalty Once you choose to start this distribution method you will have to make sure and follow the rules for the period of time that is required or you will be subject to the 10% early withdrawal penalty on all of the taxable distribution amounts for not meeting the time period rules. All of the taxable distribution amount that you receive each year will be added to all of your other gross worldwide income and taxed at your marginal tax rate. Distributions received before age 59 1/2 are subject to an early distribution penalty of 10% additional tax unless an exception applies. For more information about the treatment of retirement plan distributions go to the IRS gov web site and use the search box for Publication 575, Pension and Annuity Income. One of the exception rules to the 10% early withdrawal penalty is enclosed below and you can also find the other information in the referenced Publication. Tax on Early Distributions General exceptions The tax does not apply to distributions that are: Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after separation from service). See substantially equal periodic payments, later. Click on the below Related Links
Yes it is income, plus you will be assessed a penalty.
Typically, you're able to withdrawal from a 401k if you're atleast Age 59 1/2 and older or if you're no longer employed with the Company that the 401k you were contributing to… belongs to. However, some companies offer in-service withdrawals. Those are typically withdrawals from monies that you contributed on an after-tax basis, withdrawals from monies that your employer contributed on your behalf into the plan, and hardship withdrawals. Hardship withdrawals typically require you to complete a Hardship Withdrawal Application and send it in with proof of your hardship need. The qualifying reasons for a harship are typically: Prevention of eviction/foreclosure, Unreimbursed medical expenses, Post Secondary Education, Funeral/Burial expenses, Repair to your primary residence that qualifies as a casualty deduction expense for tax purposes, or Purchase of a primary residence. Some companies may honor other reasons as being a Qualified Hardship Reason. The best way to know if you're able to take a withdrawal from your 401k would be to contact your Plan Administrator or Reference your Summary Plan Description.
The question should say "age 59 and 1/2 years." For whatever reason, 59.5 years is the age at which you can start withdrawing funds from your 401K without penalty. Before …59 and 1/2, the penalty for early withdrawal is 10% of the taxable amount of your withdrawal. You can also withdraw money from your fund without the 10% penalty if you are leaving your employer when you are at least 55 or you become disabled. If you are eligible to withdraw money from your fund then you have to pay income taxes on the withdrawal. However, you do not have to pay income taxes if the money you withdraw go into a different employer sponsored plan or an Individual Retirement Account (IRA).
You can withdraw beginning at age 59 1/2.
The penalty is 10%. All in all you will pay your tax bracket + 10%. Actually that is incorrect. The question was about a 401k loan. There are no taxes on 401k loans unless yo…u default on the loan. If the loan defaults then yes you would owe 10% penalty plus Federal and State taxes at tax time.
You will never be able to withdraw the deferred compensation amounts from the 401K with out having to pay the federal and state income taxes that will be due when you take any… distribution amounts from your 401K plan.
Not that I know of, unless you are retiring. Usually they require one to be 100% vested before withdrawl.
The MAX amount you can draw is 300k.
Typically this is done by filling out a hardship application and sending it in with proof of your hardship need. You will need to contact your Plan Administrator to get the fo…rm.
401K money is protected from the bankruptcy trustee. So, I would not touch it at all. ans The only thing dumber financially than doing what your are suggesting is to take a… loan against the account. YOU NEED PROFESSIONAL HELP WITH YOUR SITUATION IF YOU DON'T UNDERSTAND WHY!
The withdrawal will be taxed at the rate determined by your entire taxable income, including the withdrawal. If the early withdrawal has no exceptions, it will incur an additi…onal penalty tax of 10%.
Contact Plan Administrator(where account is held) for forms.
No you can't it will be almost impossible to do so don't try to.