401K question..

[BUTCH1]

Hi all, bad news for me today, I got fired from my job of 17 years, I'm debating cashing out my 401K until I can find something else, my question is, if I got the 25K (which is about what I'd see after the tax whoppin) then found something decent in a fairly quick fashion could I re-deposit the remaining balance in an IRA account and not have to declare that amount deposited has income? thanks in advance for any advise/opinions...

 

[Schfifty Five]

Hi all, bad news for me today, I got fired from my job of 17 years, I'm debating cashing out my 401K until I can find something else, my question is, if I got the 25K (which is about what I'd see after the tax whoppin) then found something decent in a fairly quick fashion could I re-deposit the remaining balance in an IRA account and not have to declare that amount deposited has income? thanks in advance for any advise/opinions...

advice

What do you mean "found something decent?" You mean if you found a new job?

 

[Svnla]

First of all, good luck to get another job.

Secondly, IIRC, if you roll over your 401k into another plan, you do NOT have to pay any tax, just do NOT simply withdraw and spend it. Very bad, you will have to pay penalty and tax.

When you leave a job, you typically have four options: leave the money in your old employer's plan, roll it into your new employer's plan, put it into an IRA, or withdraw the balance

.
This could help = http://www.smartmoney.com/retirement/planning/how-to-rollover-a-401k-1306212047593/

 

[sportage]

You need some real tax advice. Professional. And not from here. I've heard of programs that the 401K can be rolled into, where you still have access to funds, but are only taxed on what you tap. I had a relative do something like that on a deceased spouses 401K. But you really need to be asking people that know. Not here. God forbid you should take advice from people around here on such a serious matter of taxes.

 

[BUTCH1]

advice

What do you mean "found something decent?" You mean if you found a new job?

Yea..

 

[pcgeek11]

If you touch the money it is income and will be taxed. AFAIK you could take the remainder and invest it in a ROTH IRA as Post Taxed money, as you will have already paid the taxes and penalties when it was withdrawn.

To answer the way you described No you can not do it that way. Taxes and penalties will be owed.

 

[BUTCH1]

First of all, good luck to get another job.

Secondly, IIRC, if you roll over your 401k into another plan, you do NOT have to pay any tax, just do NOT simply withdraw and spend it. Very bad, you will have to pay penalty and tax.

.
This could help = http://www.smartmoney.com/retirement/planning/how-to-rollover-a-401k-1306212047593/

Thanks, think I'll fully read the info there, I've got a lot of tough decisions coming up...

 

[Schfifty Five]

OP do you not have any emergency funds to use? Try your best to not take out that money. Keep it where it is or roll it over, but only cash it out if it's a last resort.

 

[BUTCH1]

If you touch the money it is income and will be taxed. AFAIK you could take the remainder and invest it in a ROTH IRA as Post Taxed money, as you will have already paid the taxes and penalties when it was withdrawn.

To answer the way you described No you can not do it that way. Taxes and penalties will be owed.

Oh, ok I was hoping to just spend what I need in the short-term and IRA the rest but it seems like once you touch it the hurt stick comes out..

 

[BUTCH1]

OP do you not have any emergency funds to use? Try your best to not take out that money. Keep it where it is or roll it over, but only cash it out if it's a last resort.

Yea I do but the problem is I will need a lot of $$ to keep my wife's medications on hand, plus the cost of the Dr. visits which will now be around $185/visit. Fuck it, i'm 56, worked my ass off all my life, I'm gonna apply for any type of aid that's out there, food stamps , unemployment and maybe welfare too..

 

[SSSnail]

I was going to type some typical condescending ATOT BS, but after I read on, I realized that your situation is dire. Best of luck to you, and may you find something better, soon. I don't know if borrowing would be a better option, but check that out.

 

[BUTCH1]

I was going to type some typical condescending ATOT BS, but after I read on, I realized that your situation is dire. Best of luck to you, and may you find something better, soon. I don't know if borrowing would be a better option, but check that out.

Thanks for not being condescending, it's been a long day. My Mom has offered any cash I might need but as a man my age I feel like a complete idiot, she got her $$ in the mini "golden years" when people were paying WAY too much for houses, she had a home in flagler Bch FL and it was a block off the ocean so she got $285K for it in '05, no way in hell was it worth that, it's t111 siding on a wooden frame construction with 1.5 bth, 2 bdr and no garage or carport. Couple who bought it stuccoed the exterior and did some minor landscaping then put it out$ 310K, no bites, 285K, no bites, it went into foreclosure then it burned down 2 years later..

 

[DaveSimmons]

If you're 56, you're going to need that 401k for retirement, unless you want to try to live on just social security.

It might be better to get some under the table cash from your mom as a loan, and cut back on whatever you can -- $100 cable bill? Shut that off. Fancy cell phone plan? Don't renew it. Starbucks? Make your own coffee.

If you roll over the 401k to vanguard.com as a traditional IRA, you'll have something to live on 10 years from now.

Yes, go ahead and get all of the aid that you can -- you paid taxes into the system for decades, so you've literally paid your dues to collect on that when you need it. This might be much easier to do if you DON'T cash out the 401k (and roll it over instead) since then you won't have all of that extra income for this year making you ineligible for some aid.

 

[Vdubchaos]

Sorry to hear Butch.

DO NOT touch your 401k until...
a) you talk to your accountant
b) until you HAVE TO/absolutely need it

Good luck and hope you find another job quickly.

Did they give you any severance package?

 

[Cuda1447]

Yea, like others have said.... don't withdraw the money from the 401k. Penalties and Taxes will eat it up.

 

[Jeff7]

Roll it over into another retirement account, or keep it in the original 401k account - do what you can to avoid taking it out early.

I'd go with rolling it over into an IRA. No sense taking the tax and penalties hits if you can possibly avoid it, and then you also get to choose the funds you want - not the ones your company wanted, which could be good or bad, depending on how good your 401k plan was.


Edit: Ok, numerous other circumstances are at work here. Um....someone else's advice would probably be better; looks like we've got a few experts here.

 

[BUTCH1]

Sorry to hear Butch.

DO NOT touch your 401k until...
a) you talk to your accountant
b) until you HAVE TO/absolutely need it

Good luck and hope you find another job quickly.

Did they give you any severance package?

No, no package, the company was originally Hawaiian Tropic but in the mid 2000's Ron Rice decided to spend his time "helping" with the pageants and his High school buddies he hired to run it fucked up royally to the point where he had to sell which he did to Playtex in 2007, Playtex(who markets the "Banana boat" brand) was bought 6 months later by Energizer personal care, with the battery business getting stagnant, (good quality rechargeable s out or Li-mi bat's already built in) they wanted to get into selling suncare, (it's a huge markup on the stuff) they brought in some loser managers though and most of them viewed the older guys as overpaid so we got the special treatment like last summer when it got off peak the last 3(old-timers) of us got "random" tested. Last week the crew decided to slack off and when the supervisor asked why only 2 things were done they tried to claim I didn't bring down the right chemicals as an excuse but after 17 years I knew every one like the back of my hand, I called them out on it and an argument erupted, I didn't make any threat's though, I just left for the day on PT. Got call next AM from HR about how she's investigating an "incident" that happened last night and stay home on paid leave until I conclude it and call you, not surprisingly all of the crew told HR I went off all the time (lie, I will go off if provoked, but only then). Yesterday I got fired over the phone (nice touch, huh?), the HR person deemed me as a "violence" risk even though I had never in 17 years had ANY physical contact with anyone and had never threatened anyone either, heck I supervised 2nd shift for 13 of those years, no problems with "violence" LOL at all. Now I'm going to file for unemployment so I'm sure a pack of lies will follow from HR when they find out I filed a claim. Sorry I've gone on so long about all this, I just needed to vent a little, probably should do cliffs at this point but fuck it...

 

[Jimzz]

How did you get fired and what State do you work in? Also your field?

Update your resume and file for unemployment ASAP.

But I agree leave the 401k until you are REALLY broke. Cut all the bills you can NOW. Sell any toys you can live without or just good time to have a sale now with free time.



EDIT:

Just saw your replay above mine. Any way you can get referances from some of your co-workers? Those would go a long way in your search for a new job.

 

[BUTCH1]

How did you get fired and what State do you work in? Also your field?

Update your resume and file for unemployment ASAP.

But I agree leave the 401k until you are REALLY broke. Cut all the bills you can NOW. Sell any toys you can live without or just good time to have a sale now with free time.



EDIT:

Just saw your replay above mine. Any way you can get referances from some of your co-workers? Those would go a long way in your search for a new job.

Yea, thank god I got 4-5 good people to give me a good reference..

 

[chowderhead]

You are asking if you can take the money from your 401k and use it temporarily to bridge your loss of income from losing your job? The IRS allows a 60 day period for you to roll your 401k to another 401k or IRA without a penalty. It's risky because you will owe taxes and a penalty if you don't pay it back before 60 days. Better to take a cash advance on your Cc or use up the emergency fund since that is what it is there for. Also look into Cobra coverage for health care.

 

[Genx87]

Try not to tap any investment funds. Much less ones that hit you with a 10% withdrawl fee.

 

[slsmnaz]

Fuck it, i'm 56, worked my ass off all my life, I'm gonna apply for any type of aid that's out there, food stamps , unemployment and maybe welfare too..

based on that info I hope you take it out of your 401k instead

 

[BUTCH1]

based on that info I hope you take it out of your 401k instead

Right, been working since 1974, I have collected a total of 6 weeks unemployment since then, I'd hardly consider myself as a lazy loser who refuses to get a job and wants the Gov to pick up my tab for my entire existence..

 

[BUTCH1]

You are asking if you can take the money from your 401k and use it temporarily to bridge your loss of income from losing your job? The IRS allows a 60 day period for you to roll your 401k to another 401k or IRA without a penalty. It's risky because you will owe taxes and a penalty if you don't pay it back before 60 days. Better to take a cash advance on your Cc or use up the emergency fund since that is what it is there for. Also look into Cobra coverage for health care.

Good advise but the Cobra coverage is $941/mth, yikes...

 

[Genx87]

I have never been a fan of COBRA. Go find a high deductible plan that is affordable.