Depending on your circumstances, you may be able to cash out early, but it could cost you extra when it comes to paying taxes if you're younger than 59 1/2 years old when you empty the account.
Even though it's your money, you can't always access the funds in your 401(k) plan.
But to avoid temptation, consider the true costs of taking an early 401(k) distribution.
If you’re thinking of taking an early distribution from your 401(k) account, you’re not alone.
One of the most common questions that hard-up Americans ask is: “How do I closeout a 401k account?
” If your savings are diminished, your 401k may be your only source of cash.
Finally, you can choose to closeout your 401k plan and withdraw the money.
However, there may be taxes and penalties for this as we will see shortly.
As a result, the Internal Revenue Service (IRS) collected a staggering .7 billion from 401(k) early withdrawal penalties.You'll need to provide your account information, how much you want to withdraw and how you want the money paid to you, such as via directly deposit or a paper check.If you're claiming a financial hardship, you'll need to submit documentation that supports your claim.The Investment Habit: Without an alternative structure set in place, those who don’t save in qualified plans may find themselves not saving at all. What will you DO with AFTER you liquidate your 401(k)?Where will you put the money, and how can you be confident that it is a BETTER investment than your qualified plan?