how long does it take to cash out your 401k if you quit this place? I need it. Like let’s say you quit during pay cycle, you wait it out and get your last check the next pay period then what? Maybe take 1-3 weeks?
10 replies (most recent on top)
Empower didnt take long only about a week or less to get direct deposit. I took out some of mine during my severance period (at least a month after my role termination date) so I could pay back my credit cards so I wouldnt have to keep paying them incl interest while collecting unemployment. I had Empower take out for the penalty and taxes so it doesnt bite me back when I file early next year.
@b7 All joking aside, I sincerely wish you all the best!
@ay The best financial advice I can give you is to cash out your entire 401k and all your savings and do like Mark Wahlberg did in the movie The Gambler and go down to the nearest gambling casino and put it all down on black on the Roulette wheel. Then, when it hits put all of those winnings, including what you started with and put all of that down on black again. And there ya go; financial troubles solved!
I am totally kidding! Please do not take this advice. Lol!
@av thanks for the response! Yeah I’ve had an emergency come up and I don’t have any other options.
Most people here are saying it’s a terrible idea but they don’t live your life. I’ll answer respectfully as someone who’s done both loans and withdrawal and under 59 1/2. Do what you need to do to get you through. I’ve left the company and didn’t roll into a new retirement account. I took the money I had at the time maybe around $10-15k paid tax and dealt with the rest come tax filing time. In hindsight, I should have set funds aside to account for the penalties but it wasn’t anything I couldn’t manage and I was a band 1 employee. Give yourself some grace, times are tough. As far as the timeframe empower is quick maybe a week at most?
I didn’t see anyone mention it but there is a 55 rule you should look up. I believe if you leave the organization that you have and are 55or older, then you maybe can avoid tje additional 10% penalty fee for withdrawing from 401k prior to age 59 1/2.
Whether that has to be entire withdrawal or partial withdrawal depends on how rules tje company has setup for the 401k, I do believe. Also, once you roll that 401k into an IRA, then the 55 rule no longer is applicable.
Thanks to the two replies providing more detail - I would add you can always take a short or long term loan and pay yourself back when you land on your feet and avoid the 38% loss
Call Empower to understand your options. Not sure your age or how much you have in there, but my advice if you care, think hard before you do this. The 401k and Roth 401k have different rules and penalties, there may or may not be a benefit to rolling first into a regular IRA and/or Roth if you have 401k Roth. At a minimum, be prepared to put aside money for the taxes and penalties you will owe. I am assuming you are under 59.5 years of age.
You will pay State & Federal taxes on it, and it could bump you up a tax bracket. Also if you are under 59.5 years old, they tack and extra 10% penalty on it. The default is 20% they hold back automatically. Lets say you live in CT and are under 60 and married.
22% tax bracket most likely plus the 10% penalty plus CT's tax of 6% = 38% tax hit.
you need to have them hold back 38% of your withdrawl for taxes 20% plus 18%). Lets say you want to clean out a $300K retirement account - you will pay about $114,000 to the government in taxes just on that withdrawl. Over a third, gone.
That's a financially horrible idea.