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Asked 6/11/2009

Need to cancel our 401k

It seems wrong that I lost my job do to a work related injury and now the decison is I can only work partime and we are about to lose our house and there is money just sitting in a 401k that would get us through until my settlement is in hand.
We need 4-6 months and then we would be able to stay in our house between our jobs and disability.

 
 
 
 
 
Answers

Answer 1/3 - Submitted 6/12/2009

In most cases, if you no longer work for the employer (plan sponsor) you can immediately withdraw the funds, paying the 20% federal tax (and 10% penalty in most cases when you file your taxes).
Some plans do have a wait period.... Are you having a problem trying to withdraw the funds?
If you disability is permanent, and you have an award letter, or since you were terminated -if you are over 55 the 10% extra penalty will not apply...
Not sure of your exact question.....

 
 

Answer 2/3 - Submitted 6/12/2009

The 402k is my husbands. He is over 60 and still workiing full time and a part time job. I just started working parttime this week and will not recieve my first paycheck until July. I am not allowed to work more. How can we stop and pull the funds from his 401k so we don't lose the house between now and when I get my settlement and pick up all the hours I am allowed to work?

 
 

Answer 3/3 - Submitted 6/12/2009

Check with the administrator MOST plans allow withdrawal after the age of 59 1/2 for an inservice withdrawal...
Also.. MOST plans allow for hardship withdrawals.. though for this you would have to be facing foreclosure already, and you could only withdraw the amount needed to stop the forclosure...

So I would call the administrator.. and ask if the plan allows for in service withdrawals after the age of 59 1/2... if they do... you should be able to withdraw.. Each plan is unique and the employer (sponsor) sets the provisions, so they are all a bit different.
This is a common provision.. so hopefully this will help you... The administrator cannot give you $ amounts, but should be able to send the forms per your request if it is allowed.

 
 
 
 
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