Help with 401k

[mawilson 2,133]

They will definitely penalize you with taxes before the check is even printed - I say that from experience. I had just under $4,000 on a 401k from a previous employer and thought is wouldn't be too bad...they took out more than half.

More than half??? How is that possible?

The early withdrawal penalty is 10% - and of course the remaining 90% is counted as taxable income,

but there's NO WAY they took out 50%.

probably because the vested balance was lower then the actual balance...

Oh yeah - but if that's true, there's nothing you can do about it anyway.

You can only walk away with your vested balance.

[Marilyn. 340]

They will definitely penalize you with taxes before the check is even printed - I say that from experience. I had just under $4,000 on a 401k from a previous employer and thought is wouldn't be too bad...they took out more than half.

More than half??? How is that possible?

The early withdrawal penalty is 10% - and of course the remaining 90% is counted as taxable income,

but there's NO WAY they took out 50%.

probably because the vested balance was lower then the actual balance...

Oh yeah - but if that's true, there's nothing you can do about it anyway.

You can only walk away with your vested balance.

yeah I know..

but right now our vested balance is the same as the actual balance

so if were to cash it out.. they would take the 10 percent right off the bat and then send us the rest.. and then at tax time we would have to claim the remainder on our taxes right??

[mawilson 2,133]

so if were to cash it out.. they would take the 10 percent right off the bat and then send us the rest.. and then at tax time we would have to claim the remainder on our taxes right??

I think so.

[Marilyn. 340]

so if were to cash it out.. they would take the 10 percent right off the bat and then send us the rest.. and then at tax time we would have to claim the remainder on our taxes right??

I think so.

ok just wanted to ask so I can explain all the options to hubby....

[GaryC 7]

They will definitely penalize you with taxes before the check is even printed - I say that from experience. I had just under $4,000 on a 401k from a previous employer and thought is wouldn't be too bad...they took out more than half.

More than half??? How is that possible?

The early withdrawal penalty is 10% - and of course the remaining 90% is counted as taxable income,

but there's NO WAY they took out 50%.

probably because the vested balance was lower then the actual balance...

Oh yeah - but if that's true, there's nothing you can do about it anyway.

You can only walk away with your vested balance.

yeah I know..

but right now our vested balance is the same as the actual balance

so if were to cash it out.. they would take the 10 percent right off the bat and then send us the rest.. and then at tax time we would have to claim the remainder on our taxes right??

I cashed out my 401K when I left my last job. They took 10% tax penalty, 20% federal tax and 10% state tax out of the check before I got it. Looking at my current 401K they say the same thing.

[Marilyn. 340]

They will definitely penalize you with taxes before the check is even printed - I say that from experience. I had just under $4,000 on a 401k from a previous employer and thought is wouldn't be too bad...they took out more than half.

More than half??? How is that possible?

The early withdrawal penalty is 10% - and of course the remaining 90% is counted as taxable income,

but there's NO WAY they took out 50%.

probably because the vested balance was lower then the actual balance...

Oh yeah - but if that's true, there's nothing you can do about it anyway.

You can only walk away with your vested balance.

yeah I know..

but right now our vested balance is the same as the actual balance

so if were to cash it out.. they would take the 10 percent right off the bat and then send us the rest.. and then at tax time we would have to claim the remainder on our taxes right??

I cashed out my 401K when I left my last job. They took 10% tax penalty, 20% federal tax and 10% state tax out of the check before I got it. Looking at my current 401K they say the same thing.

so just so I understand this.. if they take all those taxes off right aways do we still need to claim it on next years tax return??

[mawilson 2,133]

so just so I understand this.. if they take all those taxes off right aways do we still need to claim it on next years tax return??

Absolutely. If they took out too much, you'll get it back next year.

[GaryC 7]

I am looking at my plan. Here is what they say about loans:

Loans

You may take a loan from your vested account balance. The minimum you may borrow is $1,000 and a maximum of whichever is less: 50% of your vested account balance or $50,000 reduced by your highest outstanding loan balance during the preceding 12 months. You may not take more than one loan at a time. Your loan, plus interest, must be repaid within five years, except for primary residence loans, which must be repaid within 30 years. If you leave Advanced Technology Services, Inc., you must repay your loan in full. Otherwise, the outstanding balance will be considered a distribution (see Tax matters below).

Here is what they say about taking money out:

What are the tax consequences of taking a withdrawal?

Any withdrawals of before-tax or employer contributions and related earnings are taxable income for federal and sometimes state taxes.

Generally, a 10% penalty applies to taxable withdrawals taken before age 59½.

Most withdrawals are subject to a mandatory 20% federal withholding unless you make a direct rollover to an IRA or an eligible employer retirement plan.

Now this is just my plan but I think they are based on federal law. The only way to be sure is to talk to your HR department.

[Marilyn. 340]

I am looking at my plan. Here is what they say about loans:

Loans

You may take a loan from your vested account balance. The minimum you may borrow is $1,000 and a maximum of whichever is less: 50% of your vested account balance or $50,000 reduced by your highest outstanding loan balance during the preceding 12 months. You may not take more than one loan at a time. Your loan, plus interest, must be repaid within five years, except for primary residence loans, which must be repaid within 30 years. If you leave Advanced Technology Services, Inc., you must repay your loan in full. Otherwise, the outstanding balance will be considered a distribution (see Tax matters below).

Here is what they say about taking money out:

What are the tax consequences of taking a withdrawal?

Any withdrawals of before-tax or employer contributions and related earnings are taxable income for federal and sometimes state taxes.

Generally, a 10% penalty applies to taxable withdrawals taken before age 59½.

Most withdrawals are subject to a mandatory 20% federal withholding unless you make a direct rollover to an IRA or an eligible employer retirement plan.

Now this is just my plan but I think they are based on federal law. The only way to be sure is to talk to your HR department.

our plan says if you leave your job you either pay it in full or arrangements can be made...

[Hilarious Clinton 452]

My hubby has some money in a 401K with his current job.. the new job does offer 401K's but hubby doesn't know much about it yet...

I have no idea what is the best thing to do with this money....

My hubby is under the impression that as long as the amount is under 10,000 we don't have to claim it but I don't know if that is true or not...

Of course the money would sure come in handy but I really think we should reinvest it but I have no idea how to do it.. i tried a google search but I am eve more confused now

Unless your hubby is over 60 he will pay a 10% tax on any money he takes out. This is in addition to the 20-30% they will take out for federal and state taxes. If he will have a new 401K it would be best to roll that over into his new one. That way there is no taxes on it yet.

10% penalty on top of the tax..

choices:

cashout with penalty

rollover

leave it there

[Marilyn. 340]

hubby is going to call up fidelity tomorrow and find out what he can do...

[Hilarious Clinton 452]

hubby is going to call up fidelity tomorrow and find out what he can do...

good call.... literally. though I've had several 401k's with several companies.

[Hilarious Clinton 452]

did you call?

[Marilyn. 340]

I put a note on hubby's computer with the number and he didn't call and I forgot to remind him.. I remembered after he had left for school

I will make sure and get him to call tomorrow...

[Marilyn. 340]

ok we were bad.. we cashed it out... and yes we know we will have to probably pay taxes on it come tax time...

but right now we really need a car so I can get a job and we also have medical bills that need to be paid ....