Can i close out my 401k before retirement and i don't want to borrow?

Answer 1

Check with your HR or Benefits department, but generally speaking you can not cash out your 401(k) unles you seperate from service first. The only alternative is a loan, but that could become messy if you wind up leaving before you pay it back.

If somehow your plan allows early distributions prior to retirement or seperation of service, then the other answers are correct. If you receive a check directly from the plan, then by law they have to withhold 20% for taxes. The entire distribution will more than likely be taxable (if you have after tax contributions, then you pay no tax on those) and you will be subject to a 10% IRS penalty.

If you meet one of the qualifying distribution exceptions for IRAs (first time home purchase, medical expenses, college expenses, etc...) then if you roll your 401(k) into an IRA FIRST and then take a distribution you may be able to avoid the 10% penalty. You also control the amount that is withheld, so you may be able to keep more of your money. Again, this is usually only an option if you're over 59 1/2 or if you seperate from service i.e. quit or change jobs. But you may be able to keep more of your money. You can open a rollover IRA at any bank, find one that DOESN'T charge a fee for the account.

Answer 2

No Penalty if you're 59 1/2. Penalties and taxes will take lots of the proceeds otherwise-don't liquidate it unless you're absolutely desperate. Contact the administrators of your 401k for more information.

Answer 3

yes, with some restrictions or penalties, I believe you can. I believe you have to pay a 10% penalty and all the money becomes taxable in the same year. (I believe if your over 55 and not working or have certain medical or other expenses you can get access without borrowing, but I not read anything about it lately, so I maybe out of date, or misinformed)

Answer 4

Yes, however you will be heavily taxed and penalized for doing that.