I have a retirement plan with my employer and their policy is that the only way I can ever take any money out (emergency or not) is if I am 59 and half years (which won't be for another 25 years) or quit my job (end employment). Any other ways around this?
2007-07-15 08:56:03 · 3 answers · asked by cmax9970 3 in Business & Finance ➔ Personal Finance
The reason i want to withdraw part of it is that I am falling behind on some bills and my credit is too low for a bank loan. The plan I have is a Thrift Savings Plan and I have tried to get some money out but they absolutely refuse to deal with me and tell me that I either have to wait till I'm 59 or quit my job.
2007-07-15 09:17:37 · update #1
If the retirement plan is a 401k this is completly untrue. You can take a loan out on your 401k or you can close it out. It is your money and you have a right to it. Please keep in mind that if you close your 401k you will have to pay a penalty plus taxes up front...in the end you usually wind up losing 40% of your balance, and you will probably owe taxes at the end of the year because you must claim the amount as income at the end of the year.
In some cases (varies employer to employer) you must have a minimum amount in your 401k to take a loan out on your 401k and not all empoyers offer loans. If yours does this is by far the best way to go because you still have to pay it back and you are still earning money on the balance.
2007-07-15 09:07:17 · answer #1 · answered by Anonymous · 2⤊ 1⤋
That is actually the MOST generous policy I have ever heard of for a company plan. Most NEVER allow actual withdraws as long as you remain with the company. The IRS imposes a 10% penalty, on top of you regular tax rate for withdraws before age 59 1/2.
The ONLY time I would ever suggest pulling money from a retirement plan before retirement is as a LAST option to prevent foreclosure a home. Selling the home comes 3 steps above that on the list.
SCH misunderstands 401(k) plans, the plan CAN allow early withdraws (subject to the penalty) or loans. Those options are ENTIRELY up to the plan rules. The IRS does not require the plan to offer these options.
2007-07-15 11:21:06 · answer #2 · answered by STEVEN F 7 · 0⤊ 0⤋
Never Never Never take money out of your retirement account.
Get a second job, cut your spending, sell something on ebay or in a garage sale, etc.
You could also increase your deductions so a little less tax is taken out of your paycheck TEMPORARILY. Or reduce the amount you are putting into retirement TEMPORARILY.
You could also borrow from a relative as a last resort.
Note that most 401(k) plans allow you to take a loan against your account and pay it back (with interest) to your account. These typically carry no fees. This is not a very good idea, but is much better than taking money out and paying a fee.
With the penalties and taxes you will pay, you are really hosing yourself. You would have to take out almost twice as much as you need by the time they take out the penalties and taxes. Don't do it.
2007-07-15 09:23:23 · answer #3 · answered by Anonymous · 1⤊ 0⤋
it isnt the company policy, that is the law
you can do a loan but i wouldnt
why would you want to take money away from your retirement?
2007-07-15 09:07:00 · answer #4 · answered by swenjj 4 · 1⤊ 1⤋