Anonymous
Anonymous asked in Business & FinancePersonal Finance · 1 month ago

Fired from job with 401k?

I had about $1500 in the account. Simply because I was stressed looking for work and steady income to pay my bills and remain on top of them. 

How much is the penalty? Can I use the money that was given to me (the 401k) to pay them back ?

Can it be waived? 

5 Answers

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  • 1 month ago

    The money is yours, roll it over into an IRA.

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  • 1 month ago

    If you roll over the money to an IRA, then there is no penalty.

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  • DEBS
    Lv 7
    1 month ago

    I'm confused whether you WANT to withdraw it or if you think you HAVE to.  If you have another job with a 401k, you can roll it over to that plan without penalty.  Some companies will not force you to cash out right away either.  They may only distribute it at the end of the year (either calendar or their fiscal.)  

    If you know it's being taken out, then 10% plus counts towards your 2020 taxes is what happens.

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  • 1 month ago

    The penalty is 10%.  However, there are taxes on top of that.

    After you have cashed it out, you can do whatever you want to with the money.

    The taxes can not be "waived".  The 10% penalty can be waived if you have a qualifying reason.  However, with a 401k, those reasons are limited to death, disability, or a court order from a divorce.  Just needing the money to pay bills is not a qualifying reason to avoid the penalty.

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  • Anonymous
    1 month ago

    You will be charged a 10% fee by the IRS regardless of your circumstances.  The IRS is not forgiving.  Plus, that $1500 will be added to your annual taxable income for the year you take it out.

    Go on your 401K website and withdraw it.  Many 401K companies will automatically withhold the 10% from the withdrawal and send it to the IRS so that you don't have to come up with the cash at tax filing time.  Get your life together, figure out what you did wrong to get fired and restart your life with a new job even if it's as a Temp.

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