401k Withdrawal
RolloverUSA.com presents some useful information regarding 401K Withdrawals, Rollover and Options after taking distribution from your 401K plan. Please visit RolloverUSA.com for on-going education and information, as well as access to local registered investment advisors who can meet with you.
401k Withdrawal Options
You can rollover an IRA from one account to another at any time, but if you are a victim of a corporate layoff, or considering changing jobs or about to retire and you are thinking of rolling over or contemplating withdrawal of funds from your 401k plan, then you have several options depending on your age, provided you are no longer working for the employer providing the 401k plan.
Your 401k withdrawal options are as follows if you are over the age of 59 ½ but under 70 ½:
-Take a lump sum distribution, in which case your 401k plan provider will write you a check for the value of your account less a 20% withholding tax mandated by the IRS. The 20% tax that is withheld will be counted against your income tax payable or will be counted towards any refund due for the tax year when you file your tax return.
-You can do nothing and leave it with your previous employer as long as the amount is greater than $5,000. Amounts less than $5,000 will usually be distributed to you regardless of you age. (check with your plan sponsor)
-Do 401k rollover into an IRA or a solo 401k (if you are planning to open your own one person business).
Your 401k withdrawal options are as follows if you are under 59 ½
-Take a lump sum distribution, in which case your 401k plan provider will write you a check for the value of your account less a 20% withholding tax mandated by the IRS, and a 10% withdrawal penalty. The 20% tax that is withheld, but NOT the 10% penalty, will be counted against your income tax payable or will be counted towards any refund due for the tax year when you file your tax return. Some 401k penalty free withdrawal exceptions are here.
-You can do nothing and leave it with your previous employer as long as the amount is greater than $5,000. Amounts less than $5,000 will usually be distributed to you, less a 20% withholding tax, regardless of you age. (Check with your plan sponsor)
-Do 401k rollover into an IRA or a solo 401k (if you are planning to open your own one person business)
Your 401k withdrawal options are as follows if you are 70 ½ or older
-Take a lump sum distribution, in which case your 401k plan provider will write you a check for the value of your account less a 20% withholding tax mandated by the IRS. The 20% tax that is withheld will be counted against your income tax payable or will be counted towards any refund due for the tax year when you file your tax return.
-Leave it with your employer 401k plan but start taking the required minimum distribution.
-You can do nothing and leave it with your previous employer as long as the amount is greater than $5,000. In this event, you will be taxed 50% of the required minimum distribution. Amounts less than $5,000 will usually be distributed to you regardless of you age. (check with your plan sponsor)
-Do 401k rollover into an IRA or a solo 401k (if you are planning to open your own one person business). You still have to take the required minimum distribution even if you roll it over to an IRA.
source: rolloveraid
How Will Chapter 13 Bankruptcy Help Us if We Can’t Afford the Payment? – Michele
“Dear Steve,
We have equity in our home, more then what is owed in unsecured debt. We are considering filing Chapter 13 bankruptcy but can not aford the estimated trustee payment of $2700. If we file we will be unable to pay our monthly expenses and the trustee, combined are near $8700. The debt is 160,000 and the equity is 200,000. If we could use the equity to pay off the debt we would but we can’t get refinanced.
How is bankruptcy, Chapter 13 protecting us if we can’t afford the trustee payment and we could end up losing our home in the end.
Michele”
Dear Michele,
It doesn’t sound like it will help you then. You should not enter a Chapter 13 plan doomed for failure. It will be discharged and just be expensive and fruitless.
Frankly, it seems like some of the underlying factors here are going to have to change to lower your debt or living expenses. Rather than live in the house and try to overcome your debt you might just have to sell the house quickly and use your equity to pay off your debt. If you don’t then there is the possibility your creditors may sue you when you default on the debt you can’t afford and then they may go for a wage garnishment or a property lien or some combination of both.
There is no guaranty of being able to refinance but there is a guarantee of repayment of money borrowed under that law unless it is terminated by bankruptcy or the satisfaction of the debt.
Equity unable to be accessed is paper money, not real currency.
Big hug.
P.S. Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
Source: How Will Chapter 13 Bankruptcy Help Us if We Can’t Afford the Payment? – Michele
Other Related Articles to Read
Can They Come After My Husband for My Debt in My Name? – Lauri
“Dear Steve,
i have significant credit card debt and only make $100/wk as a part-time employee. My husband just lost his job, he has been the primary source of income for our family for the past eight years; his income ranged from 75-100K/year. All the credit cards are in MY NAME only. The house we live in is in my husbands name ONLY (mortgage and deed both). My husband has a 100K worth of 401K he needs to cash in (yeah, the penalties are ridiculous), but it will be the only way for us to survive without losing our house until he finds employment again.
If I file bankruptcy in my name for my credit card debt (total about 10K…divied up to about five different credit cards @ approx 2K each), can “they” come after my husband, our house or his 401K money (it will be in a savings account as cash by that time)? Our banking accts are mutual, with nothing in them at this point. We planned to open a seperate checking account, exclusively in my husbands name to deposit the 401K money in, so my name would not be associated at all wthi that specific account.
Again, I only make 100/week and have no legal ties to the house; but I have to know if my husband can or will be in any way responsible for any monies if I file bankruptcy in my name/
thanks so much
Lauri”
Dear Lauri,
Since you have no assets in your name and only the debt is in your name you should be able to file bankruptcy individually without any worry. Your creditors seem to have no claim to make against either the house or the retirement account.
Click here to find a local bankruptcy attorney to talk to and I’m sure once you do and they confirm this information your mind will be greatly eased.
Big hug.
P.S. Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
Source: Can They Come After My Husband for My Debt in My Name? – Lauri
Other Related Articles to Read
What Roth IRA Questions Do You Have for an IRA Expert?
I’m going to be conducting an email interview with John Bledsoe, the author I mentioned in my last post. I thought I would ask AFM readers if there are any questions regarding Roth IRAs that you would like me to ask Mr. Bledsoe. If so, send me an email with “Questions for John Bledsoe” in the subject line.
I usually try to keep email interviews to around ten questions so this is first come, first serve. That said, I’ll do my best to try to get Mr. Bledsoe to answer your questions.
My Husband Doesn’t Know I’m $38,000 in Debt. – Natasha
“Dear Steve,
I am in debt for $38,000.00 which my husband doesn’t know about. It all started about 5 years ago. I got a credit card in both our names. I was paying OK on the card, then another came in for 0% and I got that (in both names). After a while I couldn’t handle the payments and started borrowing from each one to pay the other. Recently (6 months ago), I took out another card to transfer some of the balances to that. Now, I’m up the creek because I can’t pay these. I can’t really ask the credit card co. for help because it will affect both of us. My husband and I were going through a little trouble back then, and know things are getting back to normal. My husband is a very strong willed individual. He has taken over the budget and is tracking every penny. I’m am scared to death that this will end my marriage. I don’t know how to approach him with an explanation of why this happened.
Please help!
Natasha”
Dear Natasha
Well, sigh, darn.
This truly is an unfortunate situation and I think your best approach here is the truth. This joint debt is going to be exposed at some point. If your husband ever looked at his credit report he’d clearly see it.
In all of my years of helping people situations like these typically result in a chilly relationship for a short period of time and then things thaw out. Obviously your husband is going to be surprised and probably rightfully upset at first with the identity theft on the credit applications.
If your husband knew about the debt could you, as a couple, afford to repay the debt? If not then you may want to go and talk to a bankruptcy attorney. I’m afraid this unknown and hidden debt might come as a big shock to your family budget since he has not factored it into the budget he’s created at all.
If you don’t accept responsibility for the debt now it won’t be long before the collection calls and letters come in and tip him off. He might even get calls at work.
Now is your time to come forward and be honest with him rather than be caught in this mess by forces beyond your control.
Big hug.
P.S. Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.
If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.
Source: My Husband Doesn’t Know I’m $38,000 in Debt. – Natasha
Other Related Articles to Read
How Long Will It Take to Reach a $1,000,000 Savings Goal?
I’m in the process of reading John Bledsoe’s The Gospel of Roth: The Good News About Roth IRA Conversions and How They Can Make You Money
*. So far it’s a great read. As you can probably imagine, Bledsoe is sold on the Roth IRA. Reading his book, I couldn’t help but daydream about what it would be like to have $1,000,000 sitting in a couple of Roth IRAs ($500,000 in each) by the time my wife and I retire.
Then I got to thinking…
How long would it take to get to $1,000,000 in a Roth IRA(s) if I contributed the maximum amount each year to two IRAs?
The maximum contribution amount is currently $5,000 per person ($6,000 per person if you are over 50). Due to silly income restraints, I would have to first contribute to a nondeductible IRA and then convert it to a Roth IRA. Either that, or I could make Roth contributions through my wife’s 401(k).
Here is what the math looks like:
As I noted at the bottom of the graphic, the $1,000,000 goal is not adjusted for inflation.
How long will it take?
A LONG TIME!
If this little exercise tells us anything, it’s that it’s best to start working towards financial goals AS SOON AS POSSIBLE. If you don’t, you are faced with either having to SAVE MORE or reach for higher rates of return (gamble).
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