Withdrawing 401K Money Can Harm You
I have a financial emergency, who I go to for help, and suddenly the numbers 401k appear that signify my retirement savings plan. Is it good to remove the 401K or not? These are the doubts that arise in times of economic trouble and the answer is: think about it very well.
Financial advisors answer the question of Can I withdraw my 401k and take the money? Yes you can do it, but it is better to look for other options, since the early payment will cost you a lot in fines and you will also lose growth in the coming decades.
What if I charge 401K means that I will be owing money? Many of the saver’s questions, to which the answer of an expert in the field is: Technically, yes. After you have left your employer, you can ask your plan administrator for a cash withdrawing money from 401K. They will close your account and send you a check by mail.
withdrawing money from 401K What a Great Dilemma
In the face of economic constraints, which always exist, it is unquestionable to think about taking the money saved in the retirement plan known as 401K but this would not be the best financial decision, there are those who qualify it, for a poor decision.
Some of the technical objections, of which experts in the field speak, so as not to withdrawing money from 401K:
- Charging your 401k before your 59th birthday is considered an early withdrawal and is subject to a 10% fine in addition to regular income taxes.
- The 401 (k) is financed with money before taxes, you also have to pay taxes when you withdraw it.
- Your plan administrator will mail you a check for 70 percent of your 401 (k) balance. That is your balance minus 10 percent of the fine for extraction and 20 percent to cover federal income taxes.
- With the conditions imposed when taking the retirement money in advance is that it is said that it is better not to take it, as it would be like throwing away the savings and that money is necessary in the retirement period
Can I Access The 401K At Any Time?
To this concern the answer is: You cannot withdraw 401k cash while currently working for the employer that sponsors 401k unless you have a major difficulty.
401K money can be withdrawn before 59½ without paying the 10 percent fine if the following cases apply:
- You become completely and permanently disabled
- You must assume medical expenses that exceed 7.5 percent of your gross income
- A court of law orders you to give the funds to your divorced spouse, a child or a dependent
- He retires early in the same year he turns 55 or older
- You are permanently terminated or fired, resign or withdraw and have established a schedule of regular withdrawal payments in equal amounts for the rest of your expected natural life.
Think well before making the decision
You also have the option towithdrawing money from 401K and pay the 10 percent fine if you need funds for certain financial difficulties and do not have another source of funds, but investments, family members such as: purchase of your main house, expenses of higher education, among others ..
If you plan to withdraw your retirement savings you should take into account that this benefit is canceled, which is ideal for a quiet retirement, that is, a more comfortable old age, but that you are also deducting your balance, plus the interest that your balance will accumulate In the coming decades, more interest would gain.
Before withdrawing 401K retirement money you should think twice and up to three, it is better to look for other credit or loan options to solve the economic emergency, and not lose the money you have saved for future times, that is, for retirement Well, maybe you lose more than you earn.