Is there a penalty for closing a 401K if you're quitting your job? | 401k Questions

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Asked 9/22/2010

Is there a penalty for closing a 401K if you're quitting your job?

I am quitting my job in 5 months to go to school full time. I need the money from my 401K. Will there be a penalty charge for closing the account?

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Answer 1/3 - Submitted 9/22/2010

You can withdraw the money from the plan under hardship to pay for education without penalty. If you simply ask for a disbursement when you quit, you could end up with the 10% penalty to argue about with the IRS at tax time.

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Answer 2/3 - Submitted 9/22/2010

Once you quit the job or no longer work for the company where you contribute. you can take out some money out to avoid penalty. but not all. if you take all the money out. there is a 30% penalty. that included the taxes that you need to report. they will hold 20% for taxes.

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Answer 3/3 - Submitted 9/22/2010

you will have to pay income taxes , plus ,possibly a 10 % penalty
depending on if your reason fall under the guidelines of a hardship withdraw.
heres more.

http://www.job-employment-guide.com/401k-rules-for -withdrawal.html

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