How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Jon Andrews Your Own Question
Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
4750
Type Your Tax Question Here...
Jon Andrews is online now
A new question is answered every 9 seconds

CASH OUT 401K

This answer was rated:

I have a 401k plan which has approx. $3200 in it. Due to circumstances out of my control I am needing about $2800 now. I still work for the company and plan to continue to work there, but I wanted to know if I could cash out my 401k. All the information I have seen is that people are cashing out 401k when they no longer work for the company. I am only 25 if that makes a difference. PLEASE HELP!!!

Most plans allow for "in-service" withdrawals BUT there will be a big tax cost. The company will withhold 20% so you would onyl get $2,560. Besides that, the actual tax due when you file your tax return next April could be more than the amount withheld.


There are certain specified reasons that will allow you to not pay a penalty on the withdrawal, but you will still have to pay tax on it.


[email protected] 

Customer: replied 11 years ago.
Reply to Jon Andrews's Post: THANKS FOR THE QUICK RESPONSE. I AM JUST A LITTLE CONFUSED THOUGH. WHAT DO YOU MEAN WHEN YOU SAY "IN-SERVICE"? IS THIS THE SAME THING AS CASHING OUT? THE REASON WHY I ASK IS BECAUSE I WANT TO MAKE SURE IT IS NOT THE SAME THING AS A LOAN. I DON'T WANT THE LOAN. I FIGURED THAT THE TAXES WOULD BE HIGH.

"In service" means that you make a withdrawal while you are still working for the company. It could be a complete withdrawal or a partial withdrawal.


[email protected]
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
Jon Andrews and other Tax Specialists are ready to help you
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: WHEN YOU SAY MOST PLANS ARE YOU SAYING THAT I COULD BE DENIED THE REQUEST? MY 401K IS THROUGH CORRELL COMPANY.

It is possible, though not likely, that your company's plan does not allow for "in-service" distributions, i.e. distributions while you are still working there. Most company's plans allow for this but a few do not. You will need to check with the HR person at work to make sure about your specific plan.


[email protected]
Customer: replied 11 years ago.
Reply to Jon Andrews's Post: I WILL CHECK WITH MY HR HOWEVER I WANT TO MAKE SURE THAT THIS IS SOMETHING THAT I AM ABLE TO DO AND I USE THE CORRECT TERM. IS THERE A CERTAIN AMOUNT OF TIME I WOULD HAVE TO BE EMPLOYED BEFORE I CAN DO THIS? I HAVE BEEN THERE FOR 3 YRS.

What you need to ask about is an "in-service" withdrawal from your 401-K. A total withdrawl if that is the amount that you want.


Normally there are not any length of employment issues related to in service withdrawals but, again, that is a matter of your company's plan.


You may have company contributions that have been credited to your account but are not yet vested. What this means is that, as long as the money stays in the account, you get the benefit of it but you can't take it out until it is vested, usually a number of years (3-5 years is common). Your HR person is the one that is going to be able to tell you what the plan allows and what your vested amount is.


jon

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Previous | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    577
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    577
    10 years experience
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    1245
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3882
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/TA/TaxRobin/2013-8-28_16186_femalebusinessprofessionalbinderhand11038485.64x64.jpg Robin D.'s Avatar

    Robin D.

    Senior Tax Advisor 4

    Satisfied Customers:

    11072
    15years with H & R Block. Divisional leader, Instructor
  • http://ww2.justanswer.com/uploads/YI/yirtual/2015-3-12_43754_egan.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    8621
    Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2884
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/FA/fastfile/2011-12-15_23139_Klein2011small.64x64.jpg R. Klein, EA's Avatar

    R. Klein, EA

    Enrolled Agent

    Satisfied Customers:

    1837
    Over 20 Years experience