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401k - loan vs complete withdrawal?
Posted on 12/18/21 at 6:19 pm
Posted on 12/18/21 at 6:19 pm
A lot of people know my medical issues right now, and I'm just kind of getting mentally prepared for the next few months of hell and what-ifs should this stem cell transplant not work. Basically, I have a solid chunk in my 401k - hovering around $200k. I've still got a while to go before I think about retirement (20ish years), but I have been out of work now for 9 months this year and am looking at being out until June-ish. My question is this - if I needed to take a chunk of cash out of my 401k to cover my bills and such until I can get back to work, which would be the better option - taking out a loan against the 401k or just a direct withdrawal? I cant find my paperwork to find out what my penalty/interest would be for the loan or what the tax rate would be for the direct withdrawal. Hopefully it doesn't come to this and I get back out on the road soon, but I'm just trying to map out an emergency plan should I need more treatment.
5
Posted on 12/18/21 at 6:27 pm to Horsemeat
Tough call. I would maybe just make a withdrawal.
Are there exemptions for financial hardship/medical emergencies?
Are there exemptions for financial hardship/medical emergencies?
Posted on 12/18/21 at 6:42 pm to Horsemeat
Is there a penalty for a 401K withdrawal in 2021, was suspended in 2020 was it reinstated?
Posted on 12/18/21 at 6:43 pm to Horsemeat
On a withdrawal, you may qualify for a medical hardship to waive the 10% penalty. Still looking at paying around 30% in taxes. You have to do what you have to do though.
Best of luck to you.
Best of luck to you.
Posted on 12/20/21 at 6:48 am to HogBalls
quote:Yeah this will be my last resort from my personal finances, my company has already sent me the paperwork for our assistance fund which I will use if my savings run out before i go to the 401k - mainly because I donated a bunch to it over the years.
You have to do what you have to do though.
Posted on 12/20/21 at 9:12 am to Horsemeat
Loan is a better option but they are hard to give. There are only 6 “hardship” options. Nothing else is allowed. Wish I qualified.
Only thing is, when you pay back you need to be paying off with income salary. If no salary, withdrawal may be better, just make sure they do not tax it first! Tell them you’ll file it and pay the taxes in April. If you withdraw in January that’s 16 months before paying the tax.
Apply for government help. Remember medical bills don’t affect your credit score.
Only thing is, when you pay back you need to be paying off with income salary. If no salary, withdrawal may be better, just make sure they do not tax it first! Tell them you’ll file it and pay the taxes in April. If you withdraw in January that’s 16 months before paying the tax.
Apply for government help. Remember medical bills don’t affect your credit score.
Posted on 12/20/21 at 10:05 am to Horsemeat
You may not be eligible for a 401k loan if you are not currently on the payroll. Check with HR.
Posted on 12/20/21 at 12:14 pm to HogBalls
Taxes should be at regular income tax rate not 30%. They may withhold that much but if you haven't been working I assume you'll be in a low bracket.
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