Tax consequences of liquidating 401k datingsiteblogger com
The High Cost of Cashing Out The repercussions of cashing out of your 401(k) could be enormous.For example, let's assume you are 30 years old, and have a 401(k) balance of ,000.In addition, if the non-owning spouse chooses to roll the distribution into an IRA, there would be no tax or penalty on that distribution to her either.If the non-owning spouse chooses to use the funds in any fashion other than rolling over into another qualified plan or IRA, there will be tax on the distribution, but no penalty.If you are thinking about cashing out your 401(k) when you change jobs, think twice. You might be about to forsake a financially secure retirement.
If you’re thinking of taking an early distribution from your 401(k) account, you’re not alone.
Tapping into your 401(k) isn’t as easy as cracking into a piggy bank. After early withdrawal penalties (and losing out on future earnings), what’s left of your 401(k) balance is far less than expected.
Originally published: Your 401(k) account may be the most tempting financial reserve to tap into during a cash crunch.
In 2011, Americans withdrew about billion prematurely from their retirement funds.
As a result, the Internal Revenue Service (IRS) collected a staggering .7 billion from 401(k) early withdrawal penalties.