I am 63. Can I take lumpsum distrubution from my 401K?

Answer 1

Yes but be prepared for taxes. Remember that your 401k is money that you put away tax deferred so every dollar you take out is added to your gross income for the year which can have serious consequences on your taxes. For instance let's say you make 40,000 this year and take 40,000 out of your 401k. Now you have 80k of taxable income which throws you into a higher tax bracket. You should meet with an accountant or another financial professional to determine the best way to take out the money you need without giving any away to the government you don't have to.

Answer 2

Yes, and with no penalty because you're over 59-1/2. However, you will be taxed on everything you take out and don't roll over into an IRA this year; depending on how much is in your 401(k), this could move you into a higher tax bracket.

How it's supposed to work: After 59-1/2, you can take from your 401(k) an amount to cover your living expenses, over and above any other pension or Social Security you're receiving. You then pay tax on the amount you take out, based on your Adjusted Gross Income (AGI) for the year in which you take your distribution.

Got it? The idea is that when you retire, if you're making $17,000 in Social Security and you withdraw $33,000 from your 401(k), you will have to pay taxes on $50,000 this year (plus any other taxable income you make).

Now let's assume you take out a lump sum distribution and don't reinvest it in a qualified IRA. For the sake of argument, let's assume you have $150,000 in your 401(k). You will have to pay taxes for 2006 on all your income this year, PLUS the $150,000 you take as a lump-sum distribution. The difference in tax based on going up into a higher bracket could be staggering.

My recommendation: Spend a couple hundred bucks and buy a few hours of a good accountant's time to go over your specific situation, including your financial goals, your expected needs, and your sources of income now and post-retirement.

Answer 3

Yes. Once you attained the age of 591/2 the 10% penalty for early withdrawal no longer applied. You will have a tax liability on distributions that are not rolled over within a 60 day period. The taxes due are per your current ordinary tax bracket.

Answer 4

most 401k 's will allow withdrawals with out a penalty at 59 1/2 yrs of age. Of course you will have a tax liability on the withdrawal.

Answer 5

Yes, there is NO penalty after the age of 59 1/2. You still have to pay taxes on all that you take out though.

Answer 6

I think even at 63 you will have to pay taxes on it. Check out your 401(k) plans website - it should be able to tell you. Oh, unless you roll it over into an IRA you don't have to.

Answer 7

yes. Anytime after the age of 59 and a half.

Answer 8

no