Finance Questions? Ask a Financial Expert for Answers ASAP
There are three sets of rules that govern your 401(k) plan (1) ERISA - (Employees Retirement Income Security Act - Enforced by Dept of Labor) ... (2) Internal Revenue Code (enforced by IRS) and (3) Something called the Plan document - which must meet DOL guidelines and sets out the provisions of the plan ... (such as whether the plan allows for loans or not).
If your plan does allow for loans, then, as long as the loan is paid back (typically within 5 years) there are NO TAXES or PENALTIES
If you make an actual withdrwal, and you are still with the company and under age 55, then the amount pulled out is taxable (added to your income for that tax year and taxed) and there is a 10% penaly tax on top of that .... If you have actually left the company and are over age 55 then it's just taxed with no penalty ... and finally, even if you are still with the company, if you are over age 59 and 1/2, ... then it's just taxed and there's no penalty
I am 61 years old with 4th stage cancer. If I retire from the company due to my inability
I'm so sorry ...
Then there will simply be regular tax on what you pull, no pealty
to work, can I still take a loan, or must I stay employed to take the loan?
That will depend upon the plan document, you should call and ask the administrator
O.K., I will do.
You're very welcome