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401k + Retirement Questions

Discussion in 'Off Topic [BG]' started by Boom762, Apr 25, 2015.


  1. Boom762

    Boom762 I AM the one who Booms! Supporting Member

    Oct 19, 2013
    Lubbock, TX
    I hit a bit of a bump in the road and need to pull my 401k and state retirement cache. I called around to the 2 companies I have money sitting with and of course they are closed, but one of them has a robot that told me I have service credit. For those who are in the know or have done this kind of thing before I post the following questions.

    1. Does service credit stay if you pull your savings? Can it translate to money if pulled?

    2. What is the penalty usually for pulling these things early?

    3. When you pull them, do they get transferred to your bank account immediately or do you wait around for 6 weeks and receive a check in the mail?
     
  2. GregC

    GregC Johnny and Joe Gold Supporting Member

    Jan 19, 2007
    Chicago
    The penalty is typically 10% plus income tax, so it's a big hit. Not sure about the other two questions.
     
    Boom762 and Stewie26 like this.
  3. tastybasslines

    tastybasslines Banned

    May 9, 2010
    Los Angeles, CA
    I made a big mistake taking out my 401K money back in my late 20's. Not only is the penalty big, and you basically lose all that time, but I destroyed a nice building block for my future. I know times can be tough, but I'd exhaust all other options before dipping into it.
     
  4. Boom762

    Boom762 I AM the one who Booms! Supporting Member

    Oct 19, 2013
    Lubbock, TX
    This 401k only has like 3 years in it. I've heard somewhere that you can only get into it 1 in a lifetime. Is that true? I figured even if it was, every time you change careers or companies you would have a new 401k account.
     
  5. Stewie26

    Stewie26 Supporting Member

    SunnBass and Boom762 like this.
  6. Pilgrim

    Pilgrim Supporting Member

    I would think it over multiple times and talk with a financial advisor before pulling out ANY retirement money unless you're moving it to another protected retirement account. The consequences can be pretty bad, especially down the road when it costs you thousands on money that wasn't available to generate interest.

    My advice: more research, and not here - talk with a good financial advisor.
     
    Last edited: Apr 26, 2015
    Bob_Ross, theduke1 and Boom762 like this.
  7. SunnBass

    SunnBass All these blankets saved my life.

    Aug 31, 2010
    Columbia, Mo
  8. sissy kathy

    sissy kathy Back to Bass-ics Gold Supporting Member

    Apr 21, 2014
    Arbutus, MD
    Normally your service credit disappears when you withdraw the funds, as the financial institution would be using your 401 as the security for the loan.
     
  9. Boom762

    Boom762 I AM the one who Booms! Supporting Member

    Oct 19, 2013
    Lubbock, TX
    I discussed it with a church member involved with finances and decided to pull it all this morning. For those who want to know, this is what I discovered about it all.

    I worked for the State of Texas and they use ERS. I also had a 401k in a separate company I will not mention.

    ERS Pension :
    - They charge you a 20% fine for doing anything with it outside of transferring to another company's account (withdrawing).
    - The IRS can and in most circumstances DO take 10% more for taxing. There are some situations where the IRS will not. I won't discover what they are until tax season. When you take these funds, the company you had them with mails you a form with all the info on it close to January of the following year.
    - Your pension can be withdrawn once in a lifetime. After that, you have to wait until you are 59.5 years of age before you can take it out again. I do not plan to work for the state of Texas again (forensics allows for law enforcement or privatized options in career path).

    Other Company 401k :
    - No Penalties for early withdraw from the company.
    - IRS might charge a 10% fee for taxing. The company I went must save back 20% from your payout check until tax season. THEN, the IRS judges your circumstances where they might give you a refund back for the 20% or in most cases, 10% back to you after adjustments.

    This information might be different for different states.
     
  10. placedesjardins

    placedesjardins

    May 7, 2012
    Well, I had a small amount in a 401 K, I wasn't with the company that long so the nest egg was small.
    I decided to close the account and get paid. The tax hit was like almost half if I recall of the total amount in the 401K account. Single no kids at the time so I was in that tax bracket plus penalty on early withdrawal from a 401K, I basically flushed down any gains I had from that account. Looking back, I wish I kept it in because it would have grown a lot by now.
     

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