If I cash out my 401(k) account with my previous employer, will I be able to take both my contribution and the company match at the same time ? I assume I will pay 40% of tax (penalty + tax) on both my contribution and company match.
-
5Are you 100% vested in all contributions?– kponzCommented Jul 2, 2017 at 20:05
-
Yes..but I have decided not to go ahead with withdrawal– summerCommented Jul 11, 2017 at 5:49
Add a comment
|
1 Answer
If you are vested, then the money is all yours. Tax withheld will be 20%, which is standard, but at tax time you'll owe the difference, the 10% penalty plus your marginal rate, 25% most likely.
More than that, it's our job to talk you out of this. Why not roll it to the new company 401(k) or to an IRA?
Let me add a thought - including state taxes, say you clear 60%. Instead, you transfer to the new 401(k) and borrow 50%. You pay it back over time, and instead of trashing your retirement savings, you simply have a low interest loan. To yourself.
answered Jul 2, 2017 at 20:29
JTP - Apologise to Monica♦JTP - Apologise to Monica
173k34 gold badges297 silver badges560 bronze badges
-
14I must STRONGLY emphasize Joe's point it's our job to talk you out of this. In my 20's I once cashed out a few thousand dollars of my 401k to take a vacation. A VACATION!! Been regretting that for years! On top of the ridiculous taxes and penalties I paid to do that, I lost tens (maybe hundreds?) of thousands of dollars in compound interest, because I made that mistake so early in my career. Unless you are about to lose your house, or similar dire emergency, I strongly urge you to reconsider. Commented Jul 3, 2017 at 14:00
-
1
-
Excellent! Glad you can learn from our mistakes. I hope you'll visit again. Commented Jul 11, 2017 at 13:24