Money

[oldyam80sg]

Yes this is about some money questions.I have a profit sharing plan from my work and have $40,000.00 plus in my account.Can i legally take $2000.00 out of it to put a security down payment on an apartment or wont i be able to?Any if not why?They say that my request is pending and i should have a check by June 6 Th.

[DGXSER]

Alot of that depends ont he rules your copany puts on it, all I do know for sure is that if it is treate dlike a 401K or pretax money that goes in there, you will have to pay taxes on what you take out, IIRc from when I had to empty a 401K due to a layoff years ago, it was not a small tax rate either.

[oldyam80sg]

Yes they told me that i will be taxed on the money but why would they not approve it?Any reason.A guy at my work told me he took out $5000.00 for college courses.I had a 401 K plan with a part time job years ago.I was not vested with my company yet so i kept the money .Come tax time i kicked myself but i need to move out of my $890.00 per month apartment!

[CatatonicBug]

As long as you are vested with the account, then it's your money. The only bad part is the tax rate. They really get you on that. I don't think it's a matter of approving the request, as much as a matter of processing it. They have to file paperwork with the IRS that shows that you took the money out. I have cashed out a 401k before, and it's just a matter of processing the paperwork.

[The Lorax]

some retirement/ 401k accounts will allow you to take out a loan from your account, you don't get the heinous tax rate, and you get to put the money back into the account (post tax dollars but it beats the early withdraw penalty)
I did one several years ago when I was in a bad way financially, took approx. 5 grand, out of my 401k, put it back in over the next few years. funny thing was, I paid interest on the loan, but paid it to myself as it all went into the retirement account. ask your employer if they have something like this, it might be a preferable alternative. have a nice day and ride safe

[Schmeerman]

What you are requesting, depending on your age, is a premature distribution of a retirement account.

I believe you can take the money with or without withholding on it. Just be aware that, come tax time, you will have to pay a 10 percent penalty on what you take out, as well as tax at your normal bracket level.

Some retirement plans do, as Lorax stated, allow you to borrow money from the plan. That depends on how the employer set up the plan. If it's allowed, you are essentially borrowing money from yourself. You will have to pay it back with interest, but again, as Lorax stated, you will be repaying yourself with interest.

Hope that helps. Mike

[oldyam80sg]

That's no problem-i understand that taking money out is going to cost me but i need it-i intend to put what i take out when i get my apartment security deposit back.

[Schmeerman]

I understand completely. It is, after all, your money. I hope I didn't come across as being critical of you. That was not my intent at all. You, of course, must do what is best for you. I hope that everything works out well for you.
Mike

[trbig]

My work is kind of the same way. What they don't want you doing is using your retirement fund as a simple acccount and making withdrawls at will. If you have a legit reason to need the money, they will let you have it. I took some out of mine and they automatically deducted 15% so it wouldn't hit so hard at tax time. I don't know about yours though.


Tod

[oldyam80sg]

No offense taken whatsoever.Believe me this is a last resort.I wish i didn't have to move,but my job cut everyone's hours to 36 per week until August-hopefully.Also my rent went up $20.00 and i could barely pay what i was paying let alone the increase.Hopefully my investment company wont mind.