For those who have closed out a 401K acct...........

[maslex]

Without going into much detail, I might be going on disability in the near future so I won't be at my job any longer. ***edited to add that I will be 53 this June, so I know of the penalities for being under age.

My plan is to close out my 401K to pay off a couple bills that I have. There's really not much in there but will be a big help in paying off these couple bills. And yes, I know all about the penalities and the taxes that will be taken out. I won't be going to another job, so I won't be rolling it over.

My question is............once you're no longer at a job and close out your 401K, how long does it take to get your money?

 

[Dan Murphy]

If your HR is run well, should be no more than 2 weeks or so.

Also, if you are over 55 years old, and retiring, should be no penalty, only ordinary income tax.

 

[geargrinder]

.

 

[tony67]

If your HR is run well, should be no more than 2 weeks or so.

Also, if you are over 55 years old, and retiring, should be no penalty, only ordinary income tax.

Yes is you are 55 or over and your 401k has the "Rule of 55" then this is an option - so you want to check.
Not all 401ks have this unfortunately

If you are under 55 and\or don't have the Rule of 55 then you will most likely pay a 10% penalty on top of all the taxes and it counts as income so its a loose loose in general. (as you know)

 

[SharonZ]

I live in Pennsylvania - If you are younger than age 59-1/2 there is a 10% penalty, in additional to the normal income taxes. You may be able to avoid th 10% tax for managing your disability expenses.

 

[Dan Murphy]

Not all 401ks have this unfortunately

That's a true statement Tony..

About 30 or so years of my 46 year financial planning career focused on implementing and maintaining 401(k) plans for small and medium sized companies. After the rule of 55 originated with TAMRA 88, I never saw a plan without it incorporated in the plan document. No good reason to not have it as an advantageous plan provision for the plan participants.

But, as you said, correctly so, always best to check your SPD and/or confer with your HR department to confirm so.

 

[mikehn]

Assuming its fully vested, its your money, you can withdraw it any time. It doesnt have to be 'closed'. But you already know about the penalties for early withdrawal

 

[LuvOrlando]

Put money aside to pay in taxes next year if you think it might be a thing for you, it often is.

 

[tvguy]

Only issue my wife ran into when we retired was the location she worked at kind of dragged their feet on notifying corporate that she had left, so corporate had not notified the brokerage firm she had left, so they did not want to release the money. Once the notification was made, no issue. As I have mentioned before, depending on what brokerage is managing your plan, you may get a check, not an electronic transfer. So funds may have a hold put on them until the check clears. And I was practically standing by my mailbox until the check came.
For both of us, once all the notifications were in place, we had our money within 10 days.

 

[lynxstch]

It only took a week when we closed out my husbands.

 

[LoveToDisney]

If you are totally or permanently disabled, I thought you had access to your 401k before age 59 1/2 without the 10% penalty…just paying income tax if applicable.

 

[soccerdad72]

If you are totally or permanently disabled, I thought you had access to your 401k before age 59 1/2 without the 10% penalty…just paying income tax if applicable.

Yes, that is correct:

https://www.irs.gov/retirement-plan...pics-exceptions-to-tax-on-early-distributions