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What are the cashing out profit sharing plan rules?

I quit my old job...

I quit my old job and I was 80 percent vested. Can I cash out or do I have to send it to my new job? Who would I contact to do either of these options? I owe my work for back insurance, so do they just keep it? What kind of penalty do I get for cashing out?(I'm only 24) Thanks a bunch!

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Answered in 10 minutes by:
6/11/2008
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,657
Experience: Taxes, Immigration, Labor Relations
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You may do either - cash out vested portion of your retirement plan or roll it over to a new employer's retirement plan or roll it over to the IRA account.

To cash it - you need to contact the administrator of your retirement plan - please be aware that distributed amount likely will be your taxable income plus additional 10% early distribution penalty will apply.

To roll the funds over - you need to contact the administrator of the new plan and provide the information about your current plan - contacts, last statements, etc. You will be asked to fill transfer forms and they will do the rest. The direct roll over will not be taxable event.

Any details? - Just Ask!

Lev
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Customer reply replied 9 years ago

Can they keep it because I owe back health insurance?

No unless you agree - the employer may not garnish your funds in any other way - but - to sue you and only based on the court order.

If the employer withholds your debt - you may file a complaint to Department of Labor for improper wage garnishments.

Please find in this publication provided by the DOL a brief description of wage garnishment laws - http://www.dol.gov/esa/regs/compliance/whd/whdfs30.pdf

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