Cashing in a 401K early?

Question

I have a small 401K that I need to cash in because i'm losing my job and have mortgage etc. to pay. I only have 1000.00 in it. How much approx. will I receive after all the penalties/fees etc? Will I have to claim it or anything when I do my income taxes next year too?

Answer 1

They typically withhold 20% for income taxes.  Then when you file your tax return next year, you will have to complete a separate schedule declaring this early withdrawal and calculate a 10% penalty that will be owed at that time.  And that's 10% of the gross amount.  So if you withdraw $1000, you will owe a penalty of $100.

Answer 2

The same thing happened to me.  Most places will not roll over fund of less than $2,000.  There may be a few that will allow you to roll over a $1,000 if you look long and hard enough.

I think it was around 40% that I was penalized.  It's something like 30% for early withdrawl and 10% if you're under age 55 or something.  I didn't declare anything additional on my taxes that I remember.  They'll send you a form letting you know if there's another form you have to file.  They'll tax the heck out of it before you get your check.

Answer 3

You will probably get around $700 but that's just a bit of a guess based on what I got when I cashed mine in (around 70%).  You will have to claim it on your taxes.

Answer 4

Your only way to get the exact amount is to contact your plan administrator.

You will have to claim the redemption on your tax return and penalties amy apply.  The loss of a job may qualify for special circumstances.

This is spelled out in your plan documents but it is easier to call the plan administrator and let them show you.

Answer 5

You will be hit with a 10% early withdrawal penalty and 20% to 30% for income taxes will be withheld.  You have to include this on your income tax.