Can I cancel and withdraw 401k money?

[msventoux]

Can't you do a trustee to trustee transfer to someplace like Vanguard?  If it's rolled over into another tax advantaged account you shouldn't get the early withdrawal penalties or be taxed on the amount.  I've rolled over a 401(k) and a Simple IRA into a traditional IRA at Vanguard. 

[milee]

Dec 12, 2013 23:18:55 GMT -5 msventoux said:

Can't you do a trustee to trustee transfer to someplace like Vanguard?  If it's rolled over into another tax advantaged account you shouldn't get the early withdrawal penalties or be taxed on the amount.  I've rolled over a 401(k) and a Simple IRA into a traditional IRA at Vanguard. 

Generally that's only an option when you leave your employer. 

[Bonny]

You need to review your plan documents. I know that for my 457 plan I could withdraw the money penalty free once I separated from service.

I've kept the money with the plan despite the high fees and me separating from service over 10 years ago because it still makes sense. My investments are kicking butt right now even thought I haven't made a contribution in over 10 years.

I could roll it over into an IRA but I'm 52 and I wouldn't be able to touch that money until I'm 59 1/2 or start taking equal distributions based on my projected life span (about 85).

Our original plan was that we were going to cash it in to bridge our income until DH could access his much larger 401k. Knock on my wooden head we haven't needed it. And even though we will probably never need to cash it in early I like having a plan "C" and am willing to pay the fees for peace of mind. 

[tskeeter]

I agree with Bonn, you need to check your plan documents.  But, I've never seen a plan that allows you to do withdrawls while you are still employed by the company that created the plan, except under some special circumstances.

There are a couple of ways to get money out of some 401K plans while you are still working.  The most common these days is a loan from your 401K account.  But that approach only gives you temporary access to your money, because the loan usually comes with a payment plan.  The second approach would be to see whether your plan allows for a hardship withdrawal.  If I remember correctly, some plans will allow hardship withdrawals to do things such as make down payments on homes, pay medical bills, etc.  In the plans that I've seen, you don't need to repay hardship withdrawals.  They just reduce the amount of money you have in the account.

I don't remember what the tax implications of a hardship withdrawal are.  That's something you'd need to check on.

 

[973beachbum]

Dec 13, 2013 12:14:09 GMT -5 tskeeter said:

I agree with Bonn, you need to check your plan documents.  But, I've never seen a plan that allows you to do withdrawls while you are still employed by the company that created the plan, except under some special circumstances.

There are a couple of ways to get money out of some 401K plans while you are still working.  The most common these days is a loan from your 401K account.  But that approach only gives you temporary access to your money, because the loan usually comes with a payment plan.  The second approach would be to see whether your plan allows for a hardship withdrawal.  If I remember correctly, some plans will allow hardship withdrawals to do things such as make down payments on homes, pay medical bills, etc.  In the plans that I've seen, you don't need to repay hardship withdrawals.  They just reduce the amount of money you have in the account.

I don't remember what the tax implications of a hardship withdrawal are.  That's something you'd need to check on.

 

In this case it wouldn't exactly be called a withdrawl.  It would be a change of plans.  Most companies do have more than one option for people to choose from.  In this case she would have to ask the employer to allow her to transfer her 401K from this plan to the new one.  If it is to a plan that already is an option I would think HR would have no problem.  If it is to a totally new one it could get more complicated.

Short answer is to have a sit down with HR.

[Bonny]

I'm guessing wrongside is with a public institution. I'd be surprised if there's a 401k plan option.

[Deleted]

How is your balance being eaten away by fees? Is it invested in "cash"?

If you are making Phil's 11%, what does the 1-2% management fees matter.

[Deleted]

Why is this in OT.. 

[Deleted]

Dec 13, 2013 15:05:47 GMT -5 @wrongsideof30 said:

Dec 13, 2013 14:19:10 GMT -5 @mmc said:

How is your balance being eaten away by fees? Is it invested in "cash"?

If you are making Phil's 11%, what does the 1-2% management fees matter.

The 457 account alone has a $51 per year fee. When I was logged on yesterday, I saw a bunch of other small fees that seemed to be occurring every other month. I'm not able to log back on today and haven't had a chance to use the phone. I see no reason to use ING when I have Vanguard.

Are you earning 0% on your money?

[spydah]

Can you change to funds with lower fees?

[Bonny]

Dec 13, 2013 15:49:18 GMT -5 spydah said:

Can you change to funds with lower fees?

She's actually got two layers of fees. One is the normal investment fee like Vanguard's mutual fund fee. Then there's a monthly "asset management" fee which is being charged by the fund administrator. My agency uses Nationwide Retirement Solutions (formerly Deferred Comp) which is charging about 1% per year. It's really noticeable on mine since I'm not making any contributions.

As I wrote earlier, I'm willing to pay for the flexibility to not get hit with the 10% penalty.

[hoops902]

You probably can't withdraw and you probably can't transfer.  You can't withdraw unless you have a qualifying event.  You probably can't transfer because you are still with your employer. 

If the fees are a percentage of the assets, you could do a 401k loan for the maximum possible, invest that money elsewhere, then slowly pay your loan back over time.  If you left your employer you could default the loan which essentially makes it a withdrawal (I wouldn't because the penalty probably isn't worth it).  Even if you ended up paying all of it back, it would be over an extended period of time and the fees during that time would be less.  I don't necessarily think this is a good idea, but it's as close to withdrawing the money due to the fees that you might be able to get.