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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.

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    Are you 100% vested in all contributions?
    – kponz
    Jul 2, 2017 at 20:05
  • Yes..but I have decided not to go ahead with withdrawal
    – summer
    Jul 11, 2017 at 5:49

1 Answer 1

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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.

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    I 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. Jul 3, 2017 at 14:00
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    Thank you , I have decided not to touch that money ...
    – summer
    Jul 11, 2017 at 5:48
  • Excellent! Glad you can learn from our mistakes. I hope you'll visit again. Jul 11, 2017 at 13:24

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