Jax Tax : Hello. Welcome to JA.
Jax Tax : Unlike other retirement plans, withdrawaling from this public service retirement plan after leaving your job does not involve a 10% early withdrawal penalty so there is no penalty. Jax Tax : Since you no longer work there, you need not take any steps to prove hardship to effect the distribution. Jax Tax : The only thing that applies to the withdrawal like all defferred tax plans is that the withdrawal is considered taxable income. Jax Tax : There are alternatives to withdrawal. Roll over to your currently employer's plan if any and possibly take a loan against the plan. This is not taxable income and you pay the interest back to your own account.
Jax Tax : Roll over to an IRA if no currently plan is available. You will not be able to take a loan from am IRA however.
Jax Tax : Let me ask you this because it is very very important. What is the reason/purpose for the withdrawal. What do you intend on spending the money on?
room/board and those living expenses necessary to live when out of rehab and until I can find full time employment - ucla graduate
Jax Tax : I see. Well, since you only have the option to move 100%, I would first do a direct rollover to an IRA so it is not taxed
Jax Tax : I am sorry, scratch that. There will be a penalty from the IRA.
will the situation be considered an 'emergency' so taxes will not have to be paid?
Jax Tax : Pull the entire amount. There is no penalty so you don't have much to lose. If you do not find a job, there will not be much tax as $16 puts you in a very low income bracket. Customer:
do you mean 16k and not $16 dollars?
Jax Tax : If you do find a job and they do not have you you do not qualify right away for a 401 , then invest the allowed $5k in an IRA if you can to help offset the withdrawal and get your retirement back up. Jax Tax : Just wanted to make sure you were not taking a bankruptcy exempt asset and paying on undecided debt that could be discharged in bankruptcy.
Jax Tax : If you have a large amount of debt, file BK first. This will give you not only a sober fresh start bit a financial one. Do so before withdrawal and before you find employment.
Jax Tax : $16k yes.
what about the 'emergency' clause in the 457's
Jax Tax : They do not have or you do not qualify. Must be going for worst grammar in the new year.
Jax Tax : The emergency clause is how current employees access the money. They still pay tax.
Jax Tax : There is no exception to taxation. Customer:
what do u estimate the eventual tax will be for 46yr old single male on this 457 16k withdrawl at the end of the year with only unemployment monthly all year for income
Jax Tax : OK, you have no debt. It may be better to do a direct rollover to an IRA and then take a distribution subject to a 10% penalty if you will not need all of the funds. I would say if you think you will need less than 40% of it, this would be best.
Jax Tax : 15% tax at the most.
Jax Tax : If you have large medical bills however, you may consider bankruptcy.
why would do a direct rollover to an IRA if pay a 10% penalty if I can take out the 457 with NO penalty.
Jax Tax : The direct rollover is not tax. If you need the entire $16k then there is no benefit.