Author Topic: 401K Cash Out  (Read 277 times)

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Offline ucoc

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401K Cash Out
« on: January 04, 2019, 01:43:21 PM »
I briefly asked this in another thread also, but wanted to ask if anyone had cashed out their 401K before you turned 65. My wife quit her job last year and we wanted to cash out for another purpose. If anyone has done this, did you get the money without the tax or did you have to pay the tax the following year? Was the penalty pretty big? Any recommendations or warning before we do this?

Offline mads

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Re: 401K Cash Out
« Reply #1 on: January 06, 2019, 02:24:47 PM »
Hi, we had withdrawn from our IRA when we purchased our home. We were able to pay the amount back into the IRA within the 60 day rollover. so there will be no back taxes or penalties to be paid for the 2018 tax return. The 60 day rollover rule is: if you withdraw money from your IRA or 401k , you have 60 days to put the exact amount back in a retirement account. If you are not able to do so, the money you withdrew is considered as income for that year. In addition, you need to pay a 10% penalty. You can do the 60 day rollover once every 12 months. Hope this helps.

Offline ucoc

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Re: 401K Cash Out
« Reply #2 on: January 07, 2019, 01:10:28 PM »
Hi, we had withdrawn from our IRA when we purchased our home. We were able to pay the amount back into the IRA within the 60 day rollover. so there will be no back taxes or penalties to be paid for the 2018 tax return. The 60 day rollover rule is: if you withdraw money from your IRA or 401k , you have 60 days to put the exact amount back in a retirement account. If you are not able to do so, the money you withdrew is considered as income for that year. In addition, you need to pay a 10% penalty. You can do the 60 day rollover once every 12 months. Hope this helps.

Thanks for the response. I guess not many people have dealt with this. I guess it could be just simple cash out and pay the penalty and taxes. The 60 day rollover rule is very helpful to know though. Thanks again!

 

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