2007-09-21 06:15:31 · 10 answers · asked by Ms. Lady 1 in Business & Finance ➔ Taxes ➔ United States
Sure, but you'll have to declare the distribution as income on your tax return, and if you're under 59 1/2 your distribution will be subject to a 10% penalty for early distribution on top of the tax.
2007-09-21 09:00:36 · answer #1 · answered by Anonymous · 0⤊ 1⤋
You can take out a 401K loan and it can be paid back a small amount at at time through paycheck withdrawals. You let them know if you want to pay it back within a year or two years---then they will deduct from your paycheck accordingly. Sometimes only $25 a paycheck which makes it very convenient. We have done that before and it has worked out great. It is so easy to do too. We have Fidelity and all you do is go to their website and log in and you can hit a button requesting a loan and it will tell you right then if you even qualify for a loan and how much of a loan they can give you--I don't think they let you take more than half of what is in your account. But it is helpful to just go online and check otherwise you have to go through corporate benefits and get the phone number and just call them direct. You can usually get the check pretty quick--they will even Fedx it overnight if you need it really quick too.
If you do choose just to take out a loan against your 401K (which would say you early withdrawel penalties, ect) then you can choose to use the money any way that you want to--even to pay your sister's property taxes!
2007-09-21 14:05:00 · answer #2 · answered by MarineMom 6 · 0⤊ 2⤋
It all depends on your plan, so you should check with your plan administrator. But most plans don't allow you to withdraw money from them while you are still employed there except for a very few specific hardship reasons, and your sister's property tax would almost surely not be an allowable reason.
Most but not all plans do allow you to take a loan against your 401K, so that might work out for this situation. If they allow loans, and you don't already have one against your 401K, you can probably do that. You'd have to pay it back to your 401K, but at least it would get her past this crisis.
2007-09-21 22:17:33 · answer #3 · answered by Judy 7 · 0⤊ 1⤋
Withdrawal before the age of 59½ is "Early withdrawal," which is subject to 10% penalty. In some case there is no penalty on early withdrawals but withdrawal to help your sister pay her property taxes does not qualify.
So if you use 401K you will pay 10% penalty and the withdrawal will be taxes at your regular income rate.
2007-09-21 14:42:11 · answer #4 · answered by MukatA 6 · 1⤊ 1⤋
You can use your 401(k) to help pay your sister's property taxes. However, it will be you who has to claim the money as income. Along with the income being claimed which will be taxed as ordinary income, you will also have to pay a 10% penalty.
I'm sure I could go on and on as to why this is not a good idea.
Basically, you should find out why your sister is behind on her property taxes. Why can't she get a loan from a bank? Why can't she set up a payment program with the county (or property tax authority) to pay her back property taxes?
If she can't get a loan or make other payment arrangements, I don't think that you should risk your money to help out your sister. If they think that whe will be unable to pay them back, what makes it so different for you? It sounds harsh, but it is something to consider.
2007-09-21 15:29:02 · answer #5 · answered by Steve 6 · 0⤊ 1⤋
401K is your money and the goal is to keep it there until you reach at least 59 1/2 years old. If you choose to take money out of there, you can use it for whatever you want to do. Just remember that when you do withdraw money from 401K, you need to pay 10% penalty and your ordinary income tax rate on the amount you take out.
2007-09-21 13:42:52 · answer #6 · answered by Claudio 2 · 0⤊ 2⤋
If you are currently working for your employer, you will not be allowed to take a distribution from your 401k.
If you are not currently working, and you choose to take a distribution from your 401k, then the distribution will be taxed. If you are under age 59.5, the distribution will also be subject to a 10% penalty in addition to income tax.
2007-09-21 16:32:33 · answer #7 · answered by ninasgramma 7 · 1⤊ 1⤋
You should check with your 401K administator. You can withdraw from your loan when you want, but must pay a penalty fee, which is usually a percentage of the withdraw.
2007-09-21 13:23:51 · answer #8 · answered by J*Mo 6 · 0⤊ 1⤋
You would pay 40% income tax which is the regular 30% plus a 10% penalty. Plus any penalty that the fund might charge.
2007-09-21 13:33:24 · answer #9 · answered by marie 7 · 0⤊ 4⤋
I don't think that would qualify as a hardship withdrawal reason - talk to your 401k administrator - HR rep in company
2007-09-21 13:20:11 · answer #10 · answered by Anonymous · 1⤊ 2⤋