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Early 401K Withdrawal - Talk Me Down Off the Ledge!
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#1 - You`ve been listening to too much Limbaugh or watching too much Faux News.
Bottom line, as long as you are employed and the employer has a 401K plan (qualified retirement plan), you are pretty much stuck with the 401K. But, as another poster said, the first thing you should do after leaving the company is to roll over the 401K into an IRA.
If you are self-employed, then what the heck are you doing with a 401K?
The `08 401K contribution limit is $20,500 for age 50 and over -- attractive if you are looking to protect self-employed income from taxes. The SEP limit is $46000 if you fall into the high end of BHO`s "rich" category.
RegRep11/11/2008 6:16 PM
First unless you are terminated from your employee or are retired or over age 59 1/2 you CANNOT just take ALL the money out of your 401k while you are an active employee, you may have some options such as an in--service withdraw or a loan in which you borrow from yourself and pay yourself back interest but those options are plan specific which mean the rules for GM plan will be totally different from the Google 401k plan.
Now if you are terminated from the company you CAN pull the money out and roll it over into a TRADITIONAL IRA OR ROLLOVER tax deferred however if you want to roll it into a ROTH IRA it will be treated as a withdraw and taxes Federal (mandatory) & state (some optional) will be withheld PLUS and additional 10% penalty at the end of the year.
If anyone has any questions please feel free to ask me as I currently handle 401ks for the largest Recordkeeper and Mutual Fund Company in the USA every day so I welcome your questions.