Based on the current volatile climate unfavorably forecasting the future of brick and mortar retail stores facing continued lost revenue, the unprecedented growth of eCommerce, and to further damper retail sales the emergence of COVID 19, I was considering the CASH OUT option regarding my company matched 401(k).

The Question is: While still employed with that company can I cash out, or do you have to leave the company? What happens to the funds they matched if I CASH OUT, versus leaving the company? At the end of the day do I take the money and run or take my chances on losing it all if the company ends up closing all its stores taking into account the downsizing has already begun. The boss suggests I just do not pay into my 401(k) anymore, well that is half the answer.

  • 4
    By OPT OUT do you mean just forfeiting your match altogether? That seems unwise since it's basically free money. If it becomes worthless by the time you vest then you still haven't lost anything. Is your match in company stock or can you choose other investments that are less likely to go to zero?
    – D Stanley
    Commented Sep 10, 2020 at 12:47
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    Don't panic. If you think markets will crash, move more (or even all) of your 401k money into the most conservative option available.
    – minou
    Commented Sep 10, 2020 at 13:03
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    I think the confusion here is that "Opt Out" typically means "choose not to contribute". I get the impression that you actually want to "Cash Out" your 401k? As in, take your existing money out of the plan and put it in your personal bank account? And you're wondering if you can also take out the matching that you received?
    – TTT
    Commented Sep 10, 2020 at 14:10
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    @mark carter For what it is worth. Opting out is a bad idea even in this climate. I have several friends who did that during the 2008 crash and they are SERIOUSLY regretting it now. Retirement funds are a long term investment, it is a bad idea to make long term investment decisions based on current events. if anything, I'd ramp up my investment when stocks are struggling.
    – JohnFx
    Commented Sep 10, 2020 at 18:26
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    @ifNewQuestionvoteCLOSE "Many companies have also put in rules that you can't get your money until you have quit for a year." This is illegal, at least for your own contributions. Are you just talking about matching funds that are subject to vesting? Even vested funds should be available immediately after separation.
    – D Stanley
    Commented Sep 11, 2020 at 12:44

4 Answers 4


The money in the 401(k) is your money. The solvency of your employer doesn't matter. Where you work doesn't matter, its your money.

A 401k match is a good benefit, your employer increases your pay by some amount to match your 401(k) contribution and puts that money into your 401(k).

If you need money to pay down debt or expect to be unemployed soon you should consider a few points:

  • Your employer has to pay for the match, essentially giving you a small raise. They may fire you or lay out off soon, why wouldn't you take more money now while you can get it?
  • The 401(k) is still your money. Borrowing from your own 401k is possible, though there are some rules and costs involved (essentially you have to pay yourself back with interest). This can be a second or third tier safety net.
  • If your portion of the 401k contribution will make or break your budget for the month or if you are certain you'll need to borrow from your 401k, not making the contribution puts money in your pocket. This means your employer doesn't pay their match and you leave that money on the table.
  • yoozer8 has an excellent answer which discusses vesting. If the match from your employer is not fully vested, the money isn't yours yet.

In any case, if you have money in the 401(k) and you change jobs, that money is still yours and you can move it into another 401(k) or an IRA.

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    There is one tiny exception, regarding whether the match (not the employee's own contribution) has vested before leaving the company.
    – chepner
    Commented Sep 10, 2020 at 14:17
  • Yes,points taken.At the end of the day do you move it or lose it ,or let it ride hope for a happy outcome.The strength of 401 retirement option is the question I pose to all. My circle of trust all believe that confidence is in question regarding investment strength. Please note the length I have been contributing, fortunately it is only 18 mths. so in saying that if I did lose the company match it would not be as costly as contributing funds for 5 years as an example. Over all is it safe to keep contributing to any 401 when the current political & financial indicators project uncertainty. Commented Sep 10, 2020 at 14:43
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    @MarkCarter the best time to be making routine investments is over a long timeframe and that especially contains periods of political and financial uncertainty, because that makes sure you're buying when the opportunity to buy low exists. The contributions you made in March 2020 is potentially the single best investment you made in the last 18 months.
    – user662852
    Commented Sep 10, 2020 at 14:50
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    When people here say "losing the company match", that only refers to your company not giving you further money because you have stopped contributing to your 401(k). Any money they have already contributed is safe, once it has vested (and aside from not leaving your company, you have no control over what happens to the unvested money). Any money you have contributed is entirely unaffected by your company's continued existence or your tenure there.
    – chepner
    Commented Sep 10, 2020 at 21:00

You may have a poor economic outlook for the future, but with most 401K plans you can choose your investments. You can sell all your stock and bond funds and move to a cash account or a treasury fund account. Also you can direct future investments into such accounts including your company match.

Doing this you will likely earn a small amount of interest but are likely to lose money when considering inflation. However, some make this choice because it is better then stocks losing far more.

The key thing to remember about 401Ks is there are two components. What your money is invested in today, and where future investments will be deployed. Both of those areas need to be set where you desire.

You can simply "opt out" of a 401K by not contributing anything. However some employers still put in for their employees even if they do not contribute. There seems like genuine fear of you being invested in the market. As a stock holder you have no liability other than your own investment. While investors in companies like Enron may have lost their investment they were not and could not be sued for the company's fraudulent practices.

If you are young down markets, especially in a 401K, are great opportunities to buy. You won't need the money for years and the markets are very likely to recover.


You may be able to "opt out" by not simply contributing, but some portion of your contribution may be mandatory/required. You'll have to check your employer's plan to determine if this is the case.

What happens to your employer's contributions also depends on the plan and whether there is a vesting period. If their contributions vest immediately, then it is your money as soon as it is contributed. If there is a vesting period, then some portion of may be your money, and you may lose some portion of it if you leave the company during the vesting period. Again, you'll have to check with your specific plan.

Whether you lose your money if your employer shuts down depends how you've invested it. If it's invested entirely in shares of your employer's stock, then yes, you would lose it all. If that is your concern, you should diversify your investments.

  • The plan is based on company and non company shares that are low risk low return or high risk high return investments allocated by the percentage or return of the plan you choose. I choose the slow and steady race , currently my investment plans have swung towards currencies and silver mining options and shares on OTC & TSX markets.. Commented Sep 10, 2020 at 15:07
  • I am entertaining the option of giving myself a low interest loan, rather than cashing out ,the other question is how much can I get out of the 401 account based on the personal loan option. Commented Sep 10, 2020 at 15:22
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    @MarkCarter I'd recommend against a 401(k) loan if you are concerned about your employer going under. If your employment ends you have a short period (I think between 30-60 days) to repay the loan, or it counts as a distribution, and you have to pay taxes (and 10% penalty if you are under 59 1/2)
    – yoozer8
    Commented Sep 10, 2020 at 15:42
  • It's not 'mandatory' if you can elect not to do it; that's really 'opt-out' aka default-enroll instead of 'opt-in' @yoozer8: except this year only for distributions caused by COVID (and up to $100k) there's an exception from the 10% penalty. There is still the regular tax, plus the loss of longterm growth. Commented Sep 11, 2020 at 3:50

While still employed with that company can I cash out, or do you have to leave the company?

You generally can't cash out a 401(k) while employed - some employers will allow you to do an "in-service rollover" to an external retirement account (that you could subsequently divest), but it's not common.

And it doesn't matter, because you shouldn't do it anyway.

When you cash out a deferred tax retirement plan like a 401(k) or a traditional IRA, you pay income tax on whatever was withdrawn. If you're under 59 1/2, you'll ALSO pay a 10% penalty. so depending on your federal and state tax brackets you may be paying up to 50% tax on your cashed out funds.

Also, the success of your company has absolutely no bearing on these retirement funds. They are not owned by the company - they are owned by YOU (with some broker as a custodian). If the company ceased to exist tomorrow, those funds would still be held by the broker in your name.

If you think the MARKET is going to crash, then you can choose safer investments, but be aware that over 10+ years the market has always recovered from crashes. If you plan is to get out, wait for it to go down, and get back in, that means that you know 1) when the peak is hit to get out and 2) when the bottom is hit to get back in. Many people think they know on an impending crash, but are wrong. I've been reading questions on this site for 2 years saying "I know the market is going to crash soon" but it has kept going up. Even during a pandemic, the market is back at all-time highs. Those that got out in March missed out on 30-50% gains.

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