Generally, a 10% penalty applies to funds withdrawn before age 59 ½ plus current income tax on the distributed portion. Under certain circumstances, the 10% penalty can be avoided if distributions follow the IRS guidelines found in rule 72t. Contact one of our rollover specialists for more info. Click here.

You can only take a distribution from you 401(k) account if you are no longer considered an employee. If you are temporarily laid off and there is a reasonable expectation that you will be called back to work then you would not qualify for a distribution. If your employment is considered terminated due to lay off then you would be eligible for a distribution of your funds. Even though you are no longer working for the company, you are still participating in the company 401(k) plan.

If you were still employed at the time of death, your account generally becomes 100% vested and would be distributed according to your beneficiary elections. Please refer to your summary plan description (SPD) for additional information.

You have a number of options available to you when you leave an employer, including leaving the assets where they are, rolling them over to an IRA, moving them to your new employer, or taking a lump-sum distribution. Each of these options have their own pros and cons. Before you make a decision, research each option to determine which one is right for you.

A 401(k) plan is a defined contribution plan that is a cash or deferred arrangement. You can elect to defer receiving a portion of your salary which is instead contributed on your behalf, before taxes, to the 401(k) plan. Sometimes the employer may match your contributions. There are special rules governing the operation of a 401(k) plan. For example, there is a dollar limit on the amount you may elect to defer each year. The dollar limit is $11,000.

All reporting and disclosure requirements must be satisfied by the plan administrator. The completion of the forms which must be submitted when a participant enters the 401(k) plan, the preparation of series 5500 forms, a Summary Annual Report and a statement to participants of their account balance are a few of the administrative functions of a 401(k) plan.

Basically, there are four choices: 1) rolling the money into an IRA, 2) rolling it into a new 401(k) plan, 3) leaving it in the existing plan, or 4) taking the money and paying the tax.

an employee, you are eligible to participate in your employer's 401(k) plan once you have attained the minimum required years of age and have completed the required number of hours of service. These requirements are determined by your employer and may be found in your plan's Summary Plan Description.

A 401 (k) plan loan must bear a reasonable rate of interest similar to the prevailing rate of interest charged by a bank or other professional lender making a loan in a similar circumstance. This rate varies, but it becomes fixed at the time your loan is processed and remains fixed until it is paid off. Generally, the interest rate is the Wall Street Journal prime rate plus 1%. All of the interest is credited back to the participant's account balance.

Taking a loan from your 401(k) may have a negative impact on your account, because your money is being taken out of the market. This may cause a loss of investment gains or dividends. Read More

If your vested account balance is $5,000 or more and you're under age 65, you can leave your money where it is - and taxes won't be due until you withdraw money from the account. You can roll over your 401(k) into a rollover IRA account or into your new employer's 401(k) plan. If you do a direct rollover - have the money transferred directly into the new account - you won't owe taxes until you withdraw money from the account.

In states that have community property, accrued or vested retirement benefits earned during the marriage are community property. Therefore, they are subject to division in a dissolution action, and each spouse is entitled to half. Retirement benefits subject to this community property application include military pensions, veterans educational benefits, ERISA funds, IRAs, Keoghs, Employee Stock Option Plans (ESOPS), 401K plans, etc.

Your beneficiary will receive the value of your retirement plan. This death benefit will be subject to income taxes.

In addition to lowering your taxable income, 401 (k) plans offer convenience, flexibility, compounded savings, and the ability to self direct your investments.

If you elect to receive your statement electronically, you will be notified via email when it is ready, generally about five business days after quarter end. If you elect paper statement, it will be mailed 15 business days after quarter end.

Federal and state income taxes are exempt in a 401(k) plan. City or local taxes may also be exempt. Check with your local tax authorities to verify this information.

If you are married your spouse must be listed as the beneficiary on your account unless they sign a form waiving their right. Because the 401(k) is considered a marital asset your spouse is automatically the beneficiary, if you wish to list somebody other then your spouse as the beneficiary they must waive their right to the benefit.

Deferrals cannot be withheld from compensation paid to employees after termination of employment unless the compensation is paid within 2 ½ months after the termination of employment and the compensation represents: Payments that the employee would have received if there had been no termination of employment (e.g., payment for hours actually worked prior to termination of employment or payment of commissions); OR Payment for accrued sick or vacation pay.

You will be able to withdraw your funds based on your individual balances, and the plan requirements, for the following reasons:

If your plan includes a loan provision, and you are still actively employed, then you may apply for a loan from your 401(k) account. The only portion of your balance that is eligible to borrow is your vested balance. In addition, the plan trustee must give their approval for the loan. Please see your plan's Summary Plan Description to determine if your plan has a loan provision.

The maximum amount an employee can contribute to a 401(k) plan is determined annually. You may be allowed catch up contributions in addition to annual limit, if you are age 50 or older. Refer to "Elective Deferrals" in Publication 525,taxable and Nontaxable Income. The maximum amount applies to an employee's aggregate pre-tax contributions to a 401(k) plan and 403(b) plan. There are several different limits that apply to a 401(k) plan in addition to the overall contribution limit.

In some very specific circumstances you can use money from a 401k to buy certain kinds of credit in TMRS.

Most 401(k) plans offer a variety of stock and bond investment options. However, real estate is largely not accessible in most of today's defined contribution plans. Real estate stocks' competitive rates of return, stable levels of risk, and low correlation with the investment returns of other stocks and bonds offer significant diversification benefits to a multi-asset portfolio.

If you control the 401(K) account you can implement our Legal Structure Program of your self directed IRA Assets with those funds. However, if you are an employee of a corporation that controls the 401(K) then you probably will NOT be able to implement this strategy until you leave the company or retire.

A 401(k) is a fairly simple plan. It is set up by your employer as a set contribution retirement agreement. That means you are the one who pays into the plan, although your employer and the plan provider who offers your 401(k) do just about all the work. Your 401(k) contribution is automatically deducted from your paycheck each pay period. This money is taken out and invested before your paycheck is taxed.

Participants in a 401(k) plan generally have a decent number of different investment options, nearly all cases a menu of mutual funds. These funds usually include a money market, bond funds of varying maturities (short, intermediate, long term), company stock, mutual fund, US Series EE Savings Bonds, and others.

Your 401(k) plan helps you start regular investing, and stick with it. Your contributions are automatically deducted from your salary before you receive your check. Since the money is deducted from your gross income, you will have a lower taxable income, which means you will pay less in annual taxes. The money you save will accumulate on a tax-deferred basis. This means you pay no federal or state taxes on your contributions or investment earnings until you start withdrawing money from the plan.

long as your 401(k) balance is greater than $2,000, you can take up to 50% of your account balance for purposes of a loan (minimum loan amount is $1,000). There is a $75 loan origination fee and the loan is paid back through payroll deductions (the interest charged is prime plus 2%). Participants are also charged a $50 annual loan fee. Loan requests are made through the Great West Life Annuity and generally take about 2-3 weeks to process all the necessary paperwork.