Avoid Losing 30% of Your Money with THIS - 401k Withdrawal Penalty - Cashing Out 401k Early
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- Опубликовано: 30 июл 2024
- Are you considering cashing out your 401k plan early due to debt or other financial hardships? You can end up losing 30% of your money. If you want to pull out your money without paying a 401k withdrawal penalty, this video is going to show you the best way to do just that.
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Consequences of a 401k Early Withdrawal or Cashing Out a 401k
The IRS generally requires automatic withholding of 20% of a 401k early withdrawal for taxes. So if you withdraw $10,000 from your 401k at age 45, you may get only about $8,000. You’ll get hit with a 401k withdrawal tax.
Along with the withholding taxes, the IRS will also hit you with a 401k withdrawal tax. If you withdraw money from your 401k, the IRS takes a 10% penalty when you file your tax return.
This means that you’re going to lose 30% of the amount that withdraws early from your 401k.
Retire with less.
You have to balance the long term effects of cashing out your retirement accounts. That may be ESPECIALLY true if the market is down when you make the early withdrawal. So, if you pull your money out, you’re losing out on the gains that your 401k would have if you had just waited 1-2 years for the markets to improve.
How long does it take to cash out a 401(k) after leaving a job?
It can take up to 10 business days to receive a check after cashing out your 401k. But this does not mean 10 days from when you inform Fidelity 401k that you want to cash out your 401k. This means after your 401k account manager sells your interests in your investments, it will take up to 10 days to get your check.
This means it could take 2-3 weeks to get your money from your 401k.
10% Tax Penalty Exemption
There’re a few reasons why the IRS would allow you to be exempt from the 401k withdrawal tax penalties.
Substantially equal periodic” payment plan
With this plan, retirement plans can be cashed out penalty-free. But this is only if you take annual distributions for a period of five years or until you turn 59½. But income tax must still be paid on the withdrawals.
You leave your job
This works only if it happens in the year you turn 55 or older.
Getting a Divorce
When you get divorced, you may be pulling money out of your 401k to give to your spouse. If this happens, then you won’t be charged a penalty for taking money out of 401k.
See if you qualify for a hardship withdrawal
A hardship withdrawal is a withdrawal of funds from a retirement plan due to “an immediate and heavy financial need.” A hardship withdrawal usually isn't subject to penalty. 401k hardship rules allow us to make penalty-free hardship withdrawals.
How to make a hardship withdrawal
The retirement account manager that oversees your employer’s 401ks is the one who decides if you qualify for a hardship distribution for your 401k. You may need to explain why you can’t get the money elsewhere, such as a loan or savings account.
Consider converting your 401(k) to a ROTH IRA
Individual retirement accounts have slightly different withdrawal rules from 401ks. So, you might be able to avoid that 10% 401k early withdrawal penalty by converting your 401k to a Roth IRA first. There are no mandatory withholding on IRA withdrawals.
That means you might be able to choose to have no income tax withheld and thus get a bigger check now. You still have to pay the tax when you file your return, though. So you’re never off the hook from the IRS.
To take advantage of this tax-free withdrawal, the money must have been deposited in the Roth IRA and held for at least five years AND you must be at least 59½ years old.
So, you can’t just roll your 401k into a Roth IRA today and pull it out tax-free tomorrow.
The other way is by pulling money out of your Roth IRA and paying for college.
Withdrawals for college expenses could be OK if they fit the IRS’s definition of “qualified higher education expenses.” Qualified expenses are amounts paid for tuition, fees, and other related expenses for an eligible student.
And truthfully, this one probably won’t even affect you unless you’re a little bit older and you decided to go back to school.
4. Take out the bare minimum when cashing out a 401(k)
This means if you absolutely need $10k for an emergency, don’t pull out $15k just in case you need extra.
Thanks for checking the video out! If you don't mind, comment down below and like the video. It REALLY helps with pushing out my channel to other people looking for help. (And I will love you for long time.)
The Difference Between Roth IRA and 401k Plan - ruclips.net/video/99zXtCs6WB0/видео.html
im 34 with 90k in my 401k from a job i no longer work at since i had to get surgery and got fired, im a stay at home dad now, and have 20k in the bank. looking to buy a modular home for 100k the land is 35 for 2 acres and builders fees and stuff. would you pull the 90k out to buy the house and just have to pay for the land and fees in the loan. wanting like 1300 a month as it is now. if i pay the house off it would only be like 80k loan i would have to pay off in 30 years at like 4% intrest. What would you do???? keep the 90k in the 401k that took 10 years to build or leave it and just pay the 1300 a month that will take two weeks full pay check just to pay???
Why didn't you also talk about the ways the CARES Act allows COVID related withdrawals from your 401k or IRA? I didn't see any of your other videos that addressed this.
@@robertluke341 Think this was made before that? Trying to find that too and see if I can just use that to get better control of my cash
So, I did a early withdrawal of my 401K this year. Had the 20% fed tax and 10% penalty taken out. Are you saying they tax it a second time as yearly income after that?
We experienced the peak of our era, and now it is gone. Recession is tanking everything including 401K. My retirement equities portfolio of $750K is in the reds. I keep losing because of inflation. This world will fall to the corrupt rulers in the same way that Rome did. I'm sorry if you're thinking about retiring and you're worried that your pension won't be enough to meet the rising cost of living. Horrible foreign policies everywhere, bad regulatory policy, bad fiscal policy, and bad energy policy.
For retirees and those close to retirement, I believe it's particularly challenging. All those years of labor only to lose it all to a problem you weren't responsible for, my regrets to everyone retiring during this time.
I'm very worried about the future and where we're all heading, especially in terms of money and how to get by. I'm considering making my first investment in the stock market, but how can I do so given that the market has been in a mess for the majority of the year?
After the pandemic, things became extremely difficult, which is precisely when I sought a consultant's counsel. I've been investing on my own for nearly 3 years and have built up a stagnant reserve of $280K to $570K in just over 24 months.
I agree, that's the more reason I prefer my day to day invt decisions being guided by a init-coach, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using a init-coach for over 2years+ and I've netted over 2.8million.
I’ve been down a ton, I’m only holding on so I can recoup, I really need help, who is this investment-adviser that guides you?
Nobody can become financially successful over night. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking bold steps we need in other to reach our goals.
I think it's not always about fear, Sometimes realistic factors discourage people from reaching their goals in life. For instance, I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value.
@charlotteelizabeth6830 Oh that sounds good but how do i reach out to MARTHA ALONSO HARA ?
@charlotteelizabeth6830 OKay i just found her website very impressive and dropped a message for her.,. i hope she reply me.
I'm so happy I made productive decisions about my finances that changed my life forever,hoping to retire next year... Investment should always be on any creative man's heart for success in life..
That's awesome!!! I know nothing about investment and I'm keen on getting started. What are the strategies?.
I'll advise you to work with a financial advisor.....Building a good investment portfolio is more complex so I would recommend you seek an expertise like Fergus Waylen's support with his top notch experience and insights to secure and minimize the possibilities of losses
Wow I'm amazed You mention expert Fergus waylen I thought I'm the only one that benefit from his services
Well, you are saying the fact. I invested $4,000 with fergus Waylen. and earned $12,000 .
It's been a good year since I found ways to improve my finances and by working with a renowned professional Fergus waylen, I was able to attain financial freedom.
I wasn't financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly basis via my investment and got 5 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made. Great video! Thanks for sharing!
Very inspiring! I love this. .
I hope to own a home one day. not quite long I started investing. I'm very curious already and need help on how to enhance and increase my returns. Any good investment tips will be appreciated.
@@alyciagordon3447 Generally, investing requires higher knowledge. For this reason, It's important to have a solid support structure (financial consultant) to guide you through especially in asset picking. I operate with (Alexandra Diana Jose) a consultant who partners with a licensed wealth management firm. For the record, the experience has been the best for my finance. She made me financially stable investing through her help, now I earn on a monthly basis through her passive income strategy... So I'd advise you do get a good investment advisor for yourself. .
@@davidreus9321 please how do i get in touch with her
Impressive. Would you mind sharing some more details. I’d like to have a talk with her.
@@alyciagordon3447 She is easy to find , make a quick research of her on the internet with her name Alexandra Diana Jose . She works with anyone independent of their location.
I feel like a 401k is a scam. I know it's not a scam, but just the rules around it... It doesn't feel right.
total scam during better investing my own money in robin hood without all the hassle as well as making money on rental property i wish i could get it all out knowing what i know now
I have always felt this way that it is a scam and all the rules doesn't feel right.
huge scam how many retirees are living it up in their walkers and wheelchairs most are barely getting by and better hope they don't live past 80
A 401k is a tax deferred retirement account or if it's a Roth 401k it's a tax advantaged retirement account.
It's not a scam the question is do you need a tax deferred retirement account or do you need a tax advantage retirement account.
@@kensee3160 it doesn't make it a scam because it doesn't fit your situation.
I've had employers match the dollar per dollar unlimited. It is what you make of it and all the 401K is is a retirement account nothing more nothing less.
I Retired at 68, I closed out my 401 k, taxes were 23 thousand to the fed, now the states wants to tax me on the money I got from my 401 K as income for the year,
which made my income much higher and they want to tax me way higher. WTF why save money.
Now you understand why people vote Republican.
...also, this video compelled me to subscribe... simple and direct. Very informative. Perfect.
I really hope a lot of people see this one! SUPER important!
Thank you. I have a roth 401k. About to cash out. Hopefully similar rules apply.
This video only helped me realize that this system is designed to fuck us over financially until we die. Who actually reaches retirement now days?
No the system allows you to get ways to save on taxes, the people who do not plan will pay more taxes. I choose the plan and I guarantee I'll pay lower taxes than someone else making similar money to make.
You make your choices in life and I suggest you make good ones
the government.
I LOVE how you explained this. Clear, funny, and perfect for new timers
Thank you very much for the kind words! I really do appreciate it a lot.
The gov LOVES any excuse to get their fingers in your money.
Best video/info I've come across so far.
That would be crazy if you had to pay that 30% penalty! Great insights and analysis, Shawn! Like & Subbed!
Its only a 10% penalty for early withdrawals. The income tax part, or, the other 20%, applies to any 401k withdrawals before or after age 59 1/2. Its always considered taxable income with traditional 401ks.
The little known 55 yr old exemption is a game changer.
Nice video
This does help actually, thanks man! Gotta end with a blooper too huh haha
Thank you for the feedback! What nugget really helped?
We also don't know the future. Great advice Vanilla Breyer! My emergency will have to wait...only because my personal "emergency" CAN wait...especially since we have to wait ten days anyway. :)
Great video. This guys living room is bigger than my whole house!
Pretty sure that’s like a hotel lobby or realtor building. No way that’s his house
Your videos are crystal clear . What camera are you using . Great lighting
Thanks!!
Most comprehensive video about 401k I have watched 😉
You will likely need to pay estimated taxes at the time (quarter) the Roth conversion occurs or you may need to pay a penalty when doing taxes next year. IRS wants taxes at the time of Roth conversion.
3 of my coworkers died BEFORE THE AGE OF 59.5 (aged 40, aged 46 and aged 52). I’m almost 43. I need it. I’m not waiting. And I won’t open another one unless there’s a match. It’s Roth IRA ONLY from here on out. 🤷🏽♀️
Did you make a decision? I am thinking the same. We are not guaranteed anything so want to go ahead and do something. But there are some things that have been changed where we can take some out without the penalty .. taxes are lower now than they will be for sure down the road..so wondering if I can take it out now and grow it until I need it, but worry free
Very helpful!
Thank you so much!
In lieu of our divorce and as a result of the QDRO, half the 401k was rolled over into an account in my name. I was told that I can't avoid the 20% penalty, but how do I access a portion of my 401k without incurring the 10% penalty? Do I notify the IRS that I have suffered a divorce?
I didn't even know you could take money out. I just figured I couldn't touch my money until I retired.
You're better off not touching it if you're getting a 30% hit.
@@vanillabreyer Just letting my money stack up.
@@johnjenkins4138 that is a 20% upfront tax. However, if you fall under that 20% tax bracket you will get a portion of it back when you file your taxes. And it can go towards your 10% penalty tax that is taken when you file taxes.
Lol 😂 this video means buisness but that throw off the bag was funny
Thanks! I try to make it somewhat enjoyable for the people.
I called to cashout and they told me I couldn’t because I still work at the company.
I am considering withdrawing my 401k because I am starting an RN program in a few days. I already left my full-time job and only have a couple grand in my Fidelity 401k. RN school is pretty pricey with the books, uniforms, stethoscopes, etc. I'm 25 and all of my coworkers that are older recommend I pull my 401k out now because its so little and I will most likely make it all back once i'm a Registered Nurse. What route should I take to avoid as many penalties?
In needed to do this as a teenager. I kept working.
Thanks for uploading vudeoI am on work visa and I am going back and want to take money with me for sure ...let's say it's 40k ..how much I'm gonna loose ..how much cash I will have in my hand ?
If you're paying 30% interest on a credit card with a 7,000 balance, how are you winning, even if stocks return their standard 8% yearly?
So in the example you showed, will you get the 10K all at once and then pay the 3K later when you do your taxes?
Does continuing education at a community college be considered higher learning to do a 401k early withdrawal? I have 3 old 401ks and the one is slowly climbing back up due to losses when the pandemic is happening is not back to where it was in 2019 and figure I can use that towards going back to school for. It's the oldest but in the middle of the 3 401ks.
Who withholds the automatic 20% from the 401k?! The IRS? So I’m assuming my employer will deduct that amount right away? Why then do I need to fill out a W4R form if they’re keeping 20% regardless??
Is thev30% all that you will owe after a early withdrawal and will all the money you will owe for early withdrawal be taken out of your money before you get it? When doing taxes rolls around , you won't have to pay more money for the early withdrawl?
Can you withdraw if your 54 and retired without the penalty,age 55 penalty free ? Like to purchace a home need more cash
I am 56 yo and moving back to my home country. I want to withdraw my whole 401 k and put those money into a property back home. can I do that, and can I avoid the penalty? I understand I have to pay the taxes no matter...and thats fine.
I had two jobs. I've had my current full time job for a quarter of a century. 401K stays. My 2nd job, which I quit after 7 years, has a nice 401K amount. I'm planning to cash out that, not caring about the huge penalties. Why not care? Because I have the 401K from my 1st job that has accumulated a nice amount so far.
Can I pull out money for for credit card debt withdrawal 12000
I’m only 22, my job matches 50% for up to 6% of my earnings, wish me luck!
Whatever you do… DONT withdraw any if you can keep from it. And if you change jobs make sure they have a rollover for your 401K. Just let it build up.
???Hardship Withdrawal for College Tuition or House Purchase or Eviction (in some Employers books this would be termination signal to them for someone who is too leveraged and untrustworthy with Finances or Something Important at work too) or something like that is not going to fly by Most Employer Sponsored 401k Rules (call and confirm for yourself and they would require repayment and suppress your ability to make contributions and you will be paying higher Taxes in the End as those money you didn't get a future chance to contribute to 401k will be Taxed! 😅
That house is pimp af.
I know you have to pay the taxes, but the 10% before 59 1/2 gets me, who are they to tell us when we should retire. What if we do really well and want to retire early?
Wait so is the 20% federal tax withholding taken out at the time of withdrawal? Like you never see the money? Or do you owe it the next year when you file taxes?
20% is taken out immediately then at tax time another 10% is taken for underage retirees
So what happens if you do a hard withdrawal do I got to pay the taxes or they take it automatically
I've been forced to retire and need money from 401k to pay off my car and other bills!
How can you cover this topic with out knowing or adding that information on the cares act for 2020
It was quite easy, actually.
So how to avoid 10% fee. Since 20% tax is mandatory
currently researching this for my parents, they want to move some into Bitcoin / ETH , any suggestions on doing this and avoiding the most fees?
Uh, don't.
i think you hit on every possible way to get money out, most of the ways are not penalty free. you didn't pay taxes going in , you are going to pay taxes going out. i have a large 401k balance, i've been saving for over 25 years. i'm going to suck it out slowly as to pay the lease taxes. by the way i'm 55 and still employed for now. i don't want that shot, so i might be out of a job soon.
Yikes, surprised you were able to stay employed for long failing the most basic IQ test ever.
I believe the 55 Year old IRS rule applies, if you resign or let go during that calendar year you turn 55 you should not pay the penalty, is this correct?
Yes simply Google rule of 55
lol what was that thumbnail, dude?
How do you get your money out if you don't have an actual provable hardship? We want/need to put a large addition on our house and can't really afford a loan. Is there a way?
Depends on your employer. Some places, you have to quit to get it. Others allow you to pull it out. But there's still the penalties if you just pull it out.
Question: if my company matches every dollar, I withdraw early and take the 30% penalty; isn't that still an overall 40% increase? ((100%+100%)-30%)
An instant 40% increase is definitely a no-brainer even if you have to withdraw?
That’s one way to look at it 😂
You look good 😍great upload. Thanks for sharing. I left my support liked, subbed and watched your video see you around thanks
Shawn Breyer - Finances and Investing you’re very welcome my dear friend please stay connected as i do too as well😘
my 401k is $23,000 if I choose to give %30 to taxes and they deduct $8000 which I will only receive $15000.. now with that %30 already taken to tax. My question is will I still have to pay income tax ?
If income taxes are taken out when u withdraw, it goes toward your annual tax filing so no, you're not paying taxes twice on the money BUT if u get the 10% penalty, that's over-and-above your normal tax rate on the money withdrawn. It also is only taken once though, if at all.
Yes you pay another 10% after the initial 20% taken during the withdrawal
I withdrew my 401K early as I paid off my mortgage early and resigned from my job. Had the 20% withheld for the feds and the 10% withheld for the penalty, and I was OK with that. Now my tax man is saying that after all that was stolen, that they want to tax me on it AGAIN as yearly income on top of all that. What a load of shit.
Thank you! Honestly it’s not as bad as I thought. I want to retire early, and am looking for homes overseas. Well, you basically can’t get a loan anywhere. So my only option if I was to buy a house is take out my 401k. They way you explained it has me less stressed. I can live with the penalties, and still have 200 g left over to grow till I’m 65. The only thing stopping me is my projection…. I would be throwing away literally millions if I took it out this early… but that’s the price to pay if I want to live “easy” now.. I honesty make enough with my rental coming in,, plus at 65.. what am I going to do with milk ones of dollars? I’m not trying to be cynical.. I legit was thinking that is way too much money, and will I even enjoy it at that age? Decisions, Decisions … Sorry if I’m coming off smug.. I don’t take this lightly.. I just have a habit of blabbering.. Thank you again.
Throwing away your projected growth of millions is not a decision i would make.. nor should you. Once you turn 65 you'll look back and say to yourself.. Young and dumb that was stupid. I would find another means to fund a home. My 2 cents to give you another perspective
@@markochipsmarkochips3866 Yeah, I decided to just rent. LOL, With the technology of living longer around the corner. I better be prepared just in case. 10 years will go by like nothing.. and so will the other 10 years.. so yeah, I think I will just hold on to it. Thanks!
3 of my coworkers died…at age 40, age 46 and age 52. I’m not waiting.
@@NikNik0123 Do what’s best for you. I don’t need the money and am really content in life. If you need it, yes please do. Just safe some in case you life a long happy life. Good luck :D
great invested in pay pal after made back all money ++++ sold at $296
That's awesome!
Nearly impossible to prove disability to anyone, and especially when you cash out on 401k while still working or just have lost a job or switching jobs (means you made not qualified withdrawal and would never win unless court confirming you have such special status)... Sadly even major multiple Surgeries don't mean anything to Uncle himself... Sadly speaking from my dear Deseased friend experience who was forced to pay Taxes after surgeries and needing money but dying didn't proof anything either for these penalties for unqualified withdrawal just few years before....
be aware the 10% penalty avoidance ONLY applies to the first $10k, NOT the fully amount, you WILL be charged the 10% penalty after that first $10k even with a qualifying hardship withdraw
💪 Thank you for helping clear that up!
So I have 16.5k will I only be charged 10 percent which equals 1k penalty charge on my income taxes
Does anyone know if the CARES act has been extended?...Can 401k be cashed out without penalty still?
No it has not been extended.
@@kattate8936 Ty... welp, there went a big opportunity.
@@bossbear7187 For us both 😫
I can't believe you can lose 30% of your money on this. They basically force you to stay in it.
You're gonna pay taxes on it one way or another. 401K is tax-deferred. That means you'll pay taxes on it once you retire, and when taxes will likely be higher than they are now. If there's anytime to cash out, it's now.
Correct
That’s why it’s a RETIREMENT fund 🙄🙄
@@YourMajesty143 are the taxes that are due for cashing out early. Are they due at the end of the year or I can pay them up front.?
@@EKHBLOVER - I paid mine up front, but you have the option to wait until tax season. I wish I did that bc if I didn't pay up front, I wouldn't have needed to file at all since I didn't make enough during the pandemic to pay taxes. Luckily I got it all back in my tax return. But if I were you, I'd just wait, bc they automatically take 20%. I actually overpaid in taxes and the IRS had to pay me back. That was money that I desperately needed and I couldn't access it bc it was being held up unnecessarily until my tax return came back.
Is the 401k really worth it? I have a good amount in it now and I'm thinking of not adding any more money or at least very little and putting my money elsewhere that I may be able to control it more.
In the long term it is 100 percent worth it.
If your company is matching it, that's free money you're leaving on the table when you don't take advantage of it.
Is a 401k really worth it? That 100% depends on you and your situation. We can't tell you without all information and you shouldn't be asking people who know nothing about you. Tax and financial advice can only be given when all information is known
so 30% total you don't get if you cash out everything? how about income tax?
You’ll get charged income tax on 401k withdrawals too. That was how the government set it up. We don’t pay taxes on the front end, but we pay them on the back end. Even if the “back end” is 5 years down the road. They wreck us for withdrawing that money.
I’m 26, leaving my job and moving to a new city. If I need that money (about $8,500 in my 401k account right now) to help boost my savings and afford things, is it a good idea to pull it out of the 401k or roll into the Roth account now first??
Same here, I’m 23 and about to be out my job for a few months and need extra cash got about 7.5k and don’t know what to do
Did either of you figure this out?
@@youtubedrifter5594 lol samee 23 & also curious!
If you need the money to boost your savings, leave it in your 401k till you need it
If you need to afford things don't roll it over to a Roth account.
You can't roll over a 401k to a Roth unless it's already a Roth 401k. You have to roll it over to a traditional IRA and then do a conversion. You do not give me enough information to tell you if the conversion is right for you
The penalty doesn’t seem so bad when I know my company matched 50%. That means they taxed my company and I even got to keep a bit extra ontop of the money I saved.
We get a one two punch every day we wake up from this current government 😔
I pulled money out of mine one time and took a HUGE hit on it.
It'll get you every time.
It would've been a bigger hit over 3 years, bc you're likely making the least amount during Corona since your income & taxes will increase in the coming years.
@@YourMajesty143 That's a really good point! Thank you.
@@haroldscott7625 - No problem, I took all mine out on the day I made that comment to you. Now's the time to do it, bc the market is unstable and our 401K isn't gonna grow sitting there anyhow -- in fact, we may even lose money. I pulled it out while there's no penalty and then they offered the IRS Tax-Waive -- which isn't really a waiver, bc the IRS is gonna tax me later. Lol they get you one way or the other. It's like that saying "Death & Taxes, you can't escape em". So I said "No, hit me with the taxes now. This way it's on the guaranteed lowest income I'll have and I'll get a tax return in April 2021". The guy on the phone said "Oh shoot, that's actually a smart move". Others are taking it all out and hiding them in treasury bonds, investing in gold coins, or in any other stable asset. Some are just setting it aside to buy into the market when it crashes, so that they can buy up stock when it's the cheapest and then take any new ROI to put back into their 401K once the market stabilizes (or resurges). Just wanted to give some reassurance that you did the right thing & hopefully offer a little guidance on where you can go from here :)
@@YourMajesty143 makes so much sense but i feel so lost 😧.
So...say I'm the sole provider for my wife and two son's and I'm fired from the well paying job I've had for over 13 years because I refuse to take the vacksheen...but I have mortgage and bills and mouths to feed. Would I be able to take a hardship withdrawal ?
The Supreme Court recently deemed forced vaccinations is unconstitutional for private business. Which means if you loose your job you can sue for wrongful termination.
@@t2rx7crx1 that's not what they ruled. Their ruling was the the Federal Govt (thru OSHA) can't mandate private companies. Private companies can still have their own mandates. For now my company isn't. They are trying to bribe us by raffling off cars and trucks to people who were vaxxed
@@jcoughlin325 awh that sucks. Your right. Wish the ruling was better than just stopping OSHA. I guess anything is better than nothing.
I quit my job and now trying to figure out what to do with my 401k. Thinking of just pulling all out and take it up my ass with all the penalties and taxes.
Just talked to Transamerica, hardship withdrawal is only applicable if you still work for the company. It allows you to take some money out.
Hope you and your family is doing good. Let's go Brandon.
@@t2rx7crx1 I was going to cash out too and move to Ecuador...now Ecuador has vaccine mandates in place.
I'm sorry you had to make that choice its really sad what has happened
If your 401k doesn’t allow you to hold gold, you are better off taking all your money, paying the fees and taxes, then buying gold. You will easily make up the 30 percent hit during the coming credit contraction and monetary crisis. A monetary crisis can seriously wipe out your wealth.
I did this to buy my first duplex. It's paid off very well. We cash $500 per month and have gained $85k in equity in three years.
@@vanillabreyer This is really great to hear. 401k's have some of the worst and most restrictive investment choices. Why lock your money into an underperforming vehicle? Invest in real estate, businesses, the stock market, or for the time being, wait on the sidelines with cash so you are ready to be first in line for any opportunities. People underestimate the value of freedom of choice.
@@RedShiftedDollar Heavily agree. I understand the importance of letting your money compound and not losing that money to withdrawal tax, but it sucked when EVERYONE was like, "You shouldn't be pulling your money out," while I'm just trying to make better decisions for my life. No one educates us on those better decisions really. (Besides RUclips.)
@@vanillabreyer Yes! A main reason why people are never exposed to our perspective is that the people they trust as financial advisors and educators are actually the salesmen for these funds. "My 401k guy recommended this fund or that fund." The people educating others are the same people profiting from the investments. Of course they are going to teach you their mindset that rationalizes why you should let them manage all your money.
@@RedShiftedDollar And they get paid commissions from you doing whatever it is that they tell you to do. My best friend is dealing with this but he's not in the same mindset so it's tough to explain that's not the best route.
But it's also probably the best route for someone who doesn't give a crap about learning finances and investing and how to manage it all.
I ain't going to be alive at 59.5, either I take it out now or never.
Of course I haven't contributed much to it anyway.
There's no reason to contribute to a retirement account if you don't have the will to live
@@johngill2853 that's why I stopped.
On gains not the whole amount
401 k etc should not be taxed up to a certain point which reasonable not some low cutoffs I see for many things around 20,000. They make these insanely low cutoffs like I'd like to see these a holes live on 20,00] gimme a break
I lost my job 4 months ago and depleted my savings in paying mortgage and bills. Should I take out a withdrawal to pay my bills until I find another job? I am 60.
I’m sorry to hear that! That’s tough. If you deplete your 401k now, you have to work more in retirement. But if you don’t, you’re potentially struggling more in the short term. Which one do you think is better? What’s the pros and cons of each?
Hello and thank you for responding. I calculated that I would need at least $10,000 to survive for the next 6 months or less, regarding if I find a job before then. I understand the penalties and taxes.
Going to be a lot of this going on with companies requiring vaccines
Lmao that is why I am here
Me too. Better do it why the market is up lol
Me too 😆
@@bryaningalls6618 or better yet do it before the world economy crashes ahahah
voting for Democrats has consequences
My question is: should I invest in a 401k if I KNOW I will withdraw early?? I’m about to start investing in ETFs and obviously the tax benefit of 401k would be great. Do the penalties of withdrawing early totally negate that though??
Why not just invest in the stock market at that rate?
Depends.. I would say DO IT NOW.. Take me.. I started around 28y. I’m 41 now. I have just under 600g.. Time flies by quick.. you can never compete with compound interest. I’m not saying you’ll get what I did,, but I think you can see my point.. If your just gonna withdraw in less than 5 years.. might not be worth it.
@@Food4thought1234 you don’t have 600k anymore
@@joshl90 What do you think a 401k is? Putting money in a 402k is investing in the stock market. Unless you just put all your money in bonds or cash in the 401k which most people hopefully don't. The money is going into mutual or index funds in the 401k that tracks various areas of the stock market.
I dont understand the whole divorce thing.. wtf would tye wife get some of the 401k? Lol if she wasn't the one working why should she get it..makes absolutely no sense. My brother inlaw had to pay his sleazy ex that's so insane too me. She didn't work for it
I thought it was 10 percent Penalty that what I remember on my last withdrawal
I tried using it for medical bills but they told me they would need to see the medical bills, can they do that?
Yes, they can ask for the bills if you're claiming hardship.
@@hearttoheart3317 how do you claim hardship?
Does Breast Reduction Count As “Medical Bills” ? @vanillaBreyer
Go bigger
I'm watching this for the frenchie
but you will have to pay the taxes even if the money is taken after 59 1/2 years old. So in that case it is only the 10 percent that your penalized
And on top of no penalty after 59 and a half you get to take advantage of the standard deduction and the lower tax brackets.
Do you know how much the standard deduction is and you don't have much tax-free income that can provide you every year with withdrawals from 401k?
Three of my coworkers have died. Guess how old they were…WAYYY BELOW 59.5‼️ I’m paying them penalties & getting my💰now to leave my job and take a transitional break.
I'm 39 years old. If they already took 30%, do I have to pay again to the IRS when doing my taxes the year after, upon receiving the 1099-R?
Call your 401K company. They can answer any of your questions.
You lose 20% during withdrawal before retirement age then another 10% is required during tax time
Mannnn, I’ve been investing and doing trades ..I’ve been really successful this year…..flipping 5k to 50k within a few months
Omg that’s great!
We have to do this with the vax mandate
Can I cash out my 401k if im 62 and still work for the company?
That's the question you have to ask your employer. That would depend on your employer, my plan would allow that
when i pull my money(my money) out of my 401k and ill get fucked by taxes .. but big boss man wont use my money to gamble with
You're supposed to plan for those taxes. You're only supposed to use a traditional 401k if you pay less taxes, if you were going to pay more taxes you should be using a Roth
Big Boss doesn't control your 401k it's invested through a fiduciary and you make the choices
I am 58 and a half.
Cashed out of 401k and was able to offset with my real estate write offs
That's a great point. I did the same thing, but I never correlated it with the real estate write offs. That's a great way to look at it.
How many years did it take for you to offset the money you lost from pulling it out?
Hey, great video, but I have a quick F.I.R.E related question.
If I'm interested in taking out 4% of my 401K on a yearly basis will I be qualified for a tax penalty exemption?
Not enough information
How old will you be? If you're over 55 Google the rule of 55
If you're under 55 Google substantially equal payments
@@johngill2853 Thank you. I'm planning to be less than 55 when I reach FIRE, however, with the current state of the market it might take longer than I expected...
WTF did I get myself into 🤦🏾♂️so he’s basically saying your paying either way
During the pandemic hardship can I get my money that I have saved for the future which may not ever come
That's true. And a very good point. I saw an article on Business Insider where they surveyed people and 55% of people say they already regret pulling their money out of their 401k. What do you think you'll do?
I didn't realize it was a question, sorry. You can pull out up to $100k without the 10% withdrawal penalty on your 401k. But you're still going to have to pay taxes on that money you are withdrawing.
Sounds like at the end of the day really depends on how much you need the $ and what you will do with it . I’m thinking about doing this to start a business
Traditional 401ks get taxed as income when you withdraw after 59 1/2. Why then do you and everyone else act as if the taxes are only a penalty to early withdrawals? They way I see it the firs 20% is getting lost either way. I only loose and additional 10% if I draw out early, which isnt that much lost if you really need the money to avoid a hardship in your life
The point is, say you need 10k, then you need MORE than 12k to cover that
Yes the 401K gets taxes income but most people are in lower tax bracket in retirement
59 and a half is not always accurate. For instance Google the rule of 55 for one
Your first withdrawal from 401k should be covered by the standard deduction in retirement and then your lowest tax bracket. Do you know what the standard deduction is? Do you understand the tax brackets?
@@jtowensbyiii6018 the question specifically says in retirement at 59 and a half. If you have no other income but Social Security and withdraw $10,000 from a 401k, how much tax do you pay?
Zero, don't believe me use a tax calculator. Do you know what the standard deduction is?
So if I quit my job and a check was written to me how can I still roll it into another 401K
I have limited knowledge on this particular topic. I can't find ANYTHING telling me how to reinvest that cashed out 401k back into a new 401k. So, I don't think it's possible??
I would have to say call the new employer's provider. I'm really sorry because that's a BS canned answer. If it's not too inconvenient, can you please let me know what you find out?
(Mine also just got cashed out from my old job last week.)
I'm probably reinvesting mine into a Dividend ETF. That way, I can get cash flow in retirement instead of pulling out the principle and hoping it lasts for 25 years.
@@vanillabreyer it's unbelievable you're giving advice on a 401K
@@johngill2853 lol thanks boo
Government took $ 30000.00 dollars when I had to make a Canadian currency exchange 😭😭😭😭😭😭😭 so I'm still going to Cash out 😭😭😭
Its insane that you can not get all of your money. Scam
I agree. Seems to really only benefit Wall Street.