should i quit my job to withdraw from my 401k plan?

Question

i know about the taxes and penalties that apply but i just want to withdraw from my 401k plan and roll that money over into a roll-over IRA. but do i have to quit my job to do so?

Answer 1

No you need to speak to your employer because they can actually give you permission to do this without you quitting only if they see the situation fit.

Answer 2

No, you do not have to quit your job. You can roll your 401k into a personal IRA at any bank or financial institution at any time.

However, it's really in your best interest NOT to. If your company matches a portion of your contribution to your 401k, you will lose that free money if you switch your contributions to an IRA.
Also, you have to be careful about how you roll the account over. If you just withdraw the money, it's subject to huge taxes and fees that can easily eat up 40-50% of your money - instead, you have to direct both the 401k manager and the IRA manager that you are rolling the money directly from one fund to another.
Some IRAs offer better rates of return that some 401ks, but some don't. You may have more investments choices with an IRA, but many large companies usually have access to "institutional" funds that you wouldn't be able to access through a personal IRA.

It's usually best to keep your 401k until you begin work at a new company, and then roll the old 401k into the new 401k.

Answer 3

I'm not sure where you're getting your information, but here's the correct scoop. First, and most important, you ALWAYS have the ability to roll over your balance so long as YOU initiate the transaction. Since you have over $1,000 in your account even if THEY initiate the distribution (which they can) they would have to roll it over into an IRA. Second, you do not have the option to decide how much in withholding you can have taken; it's a flat 20%. Mind you, that's not how much you will be taxed. Just how much they will withhold. Only in-service withdrawals have the option to determine how much in withholding there will be. The only other option that you have in regards to withholding is for state withholding. That's a voluntary payment. As for the 10% penalty...that's on your tax return. But if you had a refund last year of more than $130 then I wouldn't worry about it. You will still get a refund this year, just likely a little smaller.

Answer 4

You would need to quit to roll it out of the 401K. There is not tax or penalty for doing that only if you withdraw money.

Answer 5

1) there wouldn't be any taxes or penalties if you quit and do this.

2) quit your job just so you can roll over your money? I hope you either hate your job a lot or you trust that your boss will rehire you. I've heard of people doing this and then being surprised when they weren't rehired.

Honestly it makes no sense to do this unless you've got some inside information on the next "google" or "microsoft" stock.

Answer 6

why do you want to lose your job, just to move it to an IRA? That makes no sense. mutual funds are mutual funds. You probably won't get much more return in any other funds. Also it will take awhile to actually get the funds transferred - maybe a month or two after you quit and submit the paperwork to transfer the funds

Answer 7

Q. should i quit my job to withdraw from my 401k plan?
A. No

Q. but do i have to quit my job to do so?
A. If, and only if, the plan prohibits in-service withdrawals (other than hardship withdrawals), yes. No, if the plan allows in-service withdrawals (other than hardship withdrawals).