Does the federal government penalize you for taking money out of your 401K early?
612065
Yes...you have to pay a hefty tax on that money at the end of the year (when you file your Federal Return).
725978
You can cash it in with a substantial penalty.\nYou can let it sit there and hopefully grow.\nYou can roll it over into a IRA\nYou can roll it over into another 401K\nThe part of it that YOU contributed through you\npay is always yours, The part that your employer matched (if they did) is "vested' over a period of time, so if you were there less than a year\nthe part THEY contributed they probably take back.\nif you were there 5 years, it's probably all yours also.
988055
Boy, I would really avoid that if you can. The withholding isn't really up to you. They are going to keep 30 percent if the principal is before-tax money (in a Roth) and 30 percent of the profit if it is after tax money (in a traditional). But the penalty is so severe that you ought to consider doing other things (second job or whatever) to avoid the hit and the loss of your compounding if you possibly can. $1,000 left alone for 40 years will grow to more than $100,000 in a growth stock fund.
46984
Yes. Its true that you don't have to make withdrawals until you are 70 ½, but most people are looking to start withdrawals earlier than this. Chances are if you are young now you are in a lower tax bracket than you will be in when you retire. \n\nFacts:\n\nYou will be taxed based on the bracket you fall under when you make withdrawals. \n\nSolution:\n\nConsider making contribution to a ROTH IRA if you believe you are in a lower tax bracket now than you will be in when you retire. This is also save because you are getting taxed NOW, so when you go to take the money later it is tax free. It is always a good idea to diversify your money to various funds. In this case you are protected in case the Tax rate increases greatly for some variant reason.
938955
you prolly can, but you will pay HUGE early withdrawl fees and taxes.\n\nit is designed as a RETIREMENT ACCOUNT, the money is for your retirement, that is why early withdrawls out of a 401 {k} are highly troublesome
453126
I'm not a financial advisor, so you should check on this, but I believe that you will pay early withdrawal penalties plus income taxes at your current base rate on whatever you take out for whatever reason before you are 59 1/2.\n\nYou can take a loan against it, but you'll  have to pay that back.  I think you can also divide the entire value by how many years you likely have left to live (from actuarial tables) and take annual "substantially equal payments" without penalty.  All in all, very, very bad idea to use 401(k) money before you are at least 59 1/2.  \n\nCheck the Motley Fool for sound advice on paying off your loans.
320520
Absolutely though, you would need to check with a tax professional to determine whether the amounts deposited into your IRA are tax deferred or after-tax.  It all depends upon your income level.\n\nMax out your 401(k) contributions if at all possible. You're overall savings through the 401(k) far outweight the ultimate reduction in your "cash in hand" each pay check.
276883
Richard is right. The money that you take out of each employee's check is supposed to be pd(usually quarterly) to the correct place (ex fed tax is sent to the IRS)
592059
10% penalty plus taxes...so, yeah, at least 30% penalty. \n\nProject returns 50%....which will be taxable, right? So, if you are in 25% bracket, you lose 25% of your return...so, now you are down to a net gain of 37 1/2%.\nSo, it costs 30% to access your money to make a 37 1/2% return....\ntherefore...\nyou net 7 1/2% return. My guess is....you stand a decent chance of making 7 1/2% INSIDE the 401/k and saving yourself all the hassle of moving the $$ around.
341439
You can beginning making withdrawals from an IRA without penalty at age 59 1/2 (you still have to pay regular income taxes, unless it's a Roth IRA).  See the following government publication:\n\nwww.irs.gov/pub/irs-pdf/p590.pdf
675447
Each company has their own policy.  Some may allow withdrawls starting at age 55 (reduced benefits).  Generally, the only way you'll receive a lump sum is if the company had a policy such that if the net value was below some threshold (depends on the company), they would pay it out as a retirement distribution.  You would then have to put it in an IRA of some sort and cash it out early paying the appropriate penalty.  You'll need to contact the benefits dept of your former company and ask their policy.
409573
It depends on WHAT you are taking the money out for, if you want to buy a home for the first time you are allowed to "borrow" up tp $10,000 without major penalties. There are also allowances for college tuition.  Check with your 401K account advisor, if you pay back the money within a certain period of time, you are not charged major taxes or penalties.
406918
It will depend on your age and retirement status when you withdraw. Generally speaking, you will be assessed a penalty equal to 10 percent of the taxable amount of your withdrawal if you withdraw money before you reach age 59 1/2. There are some instances when you may not have to pay a penalty. Keep in mind that you must pay income taxes on all withdrawals of taxable money, \n\nDepending on your plan, you may be eligible for a "hardship withdrawal," for those unexpected circumstances when you may need your money before retirement. According to IRS safe harbor regulations, your "hardship" must represent an "immediate and heavy financial need" and is necessary to satisfy the financial need. Also, there must not be "any other resources that are reasonably available," to you to handle that financial need. The IRS has deemed the following four distribution reasons as representing an immediate and heavy financial need:\n\nCertain medical expenses for you, your spouse or your dependents \nPurchase of a primary residence (excluding mortgage payment) \nPayments of certain post-secondary education expenses for the next year for you, your spouse or your dependents \nTo prevent eviction from or foreclosure on your primary home \n \nPlease be advised that if you take a hardship withdrawal from the plan following "safe harbor" rules, you may be suspended from making contributions to the plan for a minimum of six months.  \n \nSome plans also allow hardship withdrawals for other reasons. Check with your benefits department. You will need to show your employer proof of how you intend to use the money, and proof that the amount you requested isn't more than enough to satisfy your need.  \n \nAs a result of the Economic Growth and Tax Relief Reconciliation Act of 2001, hardship withdrawals are not eligible to be rolled over, and are not subject to a federal income tax withholding. You may still owe income taxes and a possible 10% early withdrawal penalty if you are under 59 1/2 when you file your annual income tax return. State and local taxes may also apply. Please note: You should consult your financial/tax adviser with specific questions about your personal situation if you are considering a withdrawal from your plan account.
453876
First be careful of "rolling" any money without checking the tax consequences of the event. The IRS will get the money one way or the other-make sure it doesn't happen too early or for the wrong reason. Using the 401k to pay off debt should only be done if you can absorb the early withdrawal penalties ( taking contributions prior to age 59.5 for reasons such as credit card debt are subject to ordinary income tax plus 10%- you could potentially lose 50 to 60 percent of the withdrawal off the top) \n\nThe Roth IRA is a good product for retirement, however there may be other avenues you could go with money (depending of what you want out of your investment portfolio) that would not result in certain tax consequences and allow access to your money.\n\nemail me with further questions - i deal with these situations on a regular basis\n\ntake care
172085
In a traditional IRA, the money is set aside tax free, but you pay taxes on the funds when you use them once you reach the designated age.  Also, you cannot take any funds from that account before age 59.5 years, or you'll pay stiff penalties. Further, there are strict rules about when you must withdraw and how much you must withdraw when you reach the eligible age.\n\nIn a Roth IRA, the money you set aside is taxable today, but you won't pay taxes years from now, when you need to withdraw the funds.  You can withdraw the funds you contribute (but not the income those funds earn) if you need them, without penalties.  The rules for when you can withdraw and how much you must withdraw are much more flexible than a traditional IRA.\n\nI believe that Roth IRA option is not available to households above a certain income level.
450626
No penalty.  The government only cares about late tax returns if you owe them money.  If they owe you money, they're very gratefull for the interest free loan.  Expect to get your refund later than everyone else who filed their returns on time (maybe an extra week).
304477
Just fill out the form for lump sum distribution.  Please be aware you might be penalize for early withdraw and also consider the tax consequences.