How can I get my 401k money out with quitting my job?

Question

isn't against the law for my 401k provider to keep me from my money, if I want to cash out without borrowing or quitting my job. anyway I can protest, to get my money?

Answer 1

No, it's actually against the law for them to allow you to get your money unless you quit, die, become disabled, reach age 59 1/2, or are in a hardship situation.

Technically it's not your money.  You agreed to defer receipt of that money in exchange for lower taxes.  As part of that agreement that money was placed in trust for your benefit.  No receipt = no ownership.   Back in the day they 401k wasn't even invested according to your wishes.  They had one fund that was managed by professional fund managers and that's it.   But, a few yahoos thought they could do better and sued....of course they lost but the costs in defending the suits were too large so plans started opening them up to multiple investment options and individually directed plans in order to minimize fiduciary liability.  According to the law they don't even have to give you that "luxury".

More than you wanted to know but explains a bit why you can't get at the money and why there is an appearance that it belongs to you.

Answer 2

Some plans allow for "Hardship Distributions" but it varies by plan.  Some do....some don't.

Answer 3

To elaborate on what Joseph wrote, you don't want to touch your 401k money.  If you have $10,000 in it, you'll have to fork over $1,000 immediately for the penalty.  Then, the IRS counts the $10,000 that you took out as income, which means that you'll be taxed for that additional amount.  Finally, you'll lose all the interest and potential savings for your retirement -- which if it's a while away can amount to $500,000 or more.  Don't do it!

Answer 4

You can stop contributing, but you cannot "cash out" a 401(k) account just because you want to.  

Depending on what your plan provides, you could take a loan or a hardship distribution from your 401(k) plan.  Otherwise, you would need to be retirement age or dead.  Actually, leaving your job sounds better than that and would allow you to cash out or roll over the money.  Why not keep this money invested long-term and save some other money for short-term needs?

Answer 5

Joseph is right on all counts.

Answer 6

You can get it out by filling out the paperwork, paying the 10% penalty, and the 15-28% tax liability.   But it would be truly stupid to do it! You will be lucky to walk away with half the money if you insist on taking it before retirement.

It SHOULD be "against the law" for people to take 401(k) funds out at all before retirement, unless they have a fatal illness.

Answer 7

No, actually it's not against the law for them to disallow a cash out while you are still employed. In fact, 401ks are regulated by the SEC and IRS so it was their idea. They want you to save for retirement, so they don't want you to cash out early unless you have to. That's where hardship withdrawals come into play.

This website contains a lot of easy-to-read info about 401ks...