I quit my job, how do I cash out my 401K?

Question

I recently quit my job and now I need to know how I can cash out my 401K?
(I understand it will be taxed, and I know it's better to roll it into other options.)

Answer 1

It depends on the rules setup with your particular 401k
offering, normally though it will take about 3 months after
you have left. Your 401K administrator will contact you
to see what you want to do (rollover, lump sum payment).

You may wish to contact the administrator and see if
you can get it earlier. You are correct, you will have
a certain % (usually 20%) for federal withholding and
will pay a 10% early withdrawal penalty, unless you are
59 1/2 years old.

Answer 2

Contact your employer and request to withdraw all the funds from your 401k. They should send you the paperwork that you will need to fill out. As an alternative, you could open an individual IRA and request that the funds from you 401k be deposited directly into the IRA. Then you could make a partial IRA withdrawal (to tide you over) and leave much of your IRA intact.

Answer 3

call the company that handles your 401k. Obviously, this is a really bad idea. It would be a must smarter move to transfer it to an IRA...and even borrow money instead.

Answer 4

You get to keep the vested amount minus taxes, penalty and any processing fee. You'll pay a 10% penalty for the early withdrawal. And the gross amount of the withdrawal is taxable income - so the tax bite depends on your TOTAL income, filing status, etc. I assume you mean $1700, not "1700k" (that means $1,700,000).

Answer 5

I know you've already heard this.... but I must add one more voice.........

I quit a job in 1980. I cashed in my retirement account. It cost me almost 50% in taxes and penalty combined. The $5,000 (today) would be worth $65,549 if I had just put it in a boring S&P500 Index Fund. PLEASE DON'T MAKE THE SAME MISTAKE. RECONSIDER.