when can we withdraw from 401k?

[seekininfo]

can we withdraw after discharge?
I KNOW its not always a good idea, but we need to replace the roof on the house.

[justbroke]

Are you taking a withdrawal or a loan? The tax implications on a withdrawal are steep and significant. If you had to take a true withdrawal, you may as well have taxes taken out right then, as well as the 10% penalty. I wouldn't take a withdrawal unless they took 33-40% in taxes upon issuing the check. Otherwise, you'll end up in a bad way next year when it comes time for taxes.

Oh, and never take a withdrawal. (Yes, I just explained that if I had to, I'd have taxes taken out at 33-40%, but still... never take a withdrawal.)

[seekininfo]

unfortunately it would have to be a withdrawal. And I'd definitely have them take the taxes out when issuing the check.

[justbroke]

Are you taking a withdrawal because you don't have enough for a loan? I'd take the maximum loan first, then take the rest as a withdrawal. Can make a huge difference in taxes. If this is a large amount -- which a roof repair sounds like -- it could really hurt your retirement plans.

Also, you probably won't be able to contribute into your plan for as long as a year. Did you discharge the loan on the home? Did you reaffirm? Is the home underwater? The bottom line is... is this a sound financial decision to repair the home... especially if it was discharged and is underwater.

[seekininfo]

my husband actually has TWO accounts.
One has just been sitting for years and now has only around $11,000 in it.
thats the one we were taking from/closing?

why cant we contribute to the plan for a year? They never mentioned that and DH is still having it withdrawn.

We reaffirmed the house. Its worth around $60,000 and we owe $20,000.

[justbroke]

You should review your Plan requirements with your Plan Administrator. The IRS imposes at least a 6 month penalty period where you are not allowed to participate (contribute or withdraw) from a 401(k) plan after taking a hardship withdrawal.

[seekininfo]

hmm, thats good to know. What about closing out the old 401k?

You should review your Plan requirements with your Plan Administrator. The IRS imposes at least a 6 month penalty period where you are not allowed to participate (contribute or withdraw) from a 401(k) plan after taking a hardship withdrawal.

[justbroke]

If it's from a prior employer, it may be moot. However, if the "old" 401(k) is from the same employer, that may be an issue.

[seekininfo]

it's from 18 yrs ago, a DIFFERENT employer

If it's from a prior employer, it may be moot. However, if the "old" 401(k) is from the same employer, that may be an issue.

[Flamingo]

can we withdraw after discharge?
I KNOW its not always a good idea, but we need to replace the roof on the house.

One of the worst things you can do. When you have retirement accounts, you should forget you have them and just contribute to them as you can and not take out unless it is an extreme emergency. A new roof is not an extreme emergency unless one can see blue sky looking up as we had to have one replaced (25 years old) during our Chapter 13. As stated in previous postings, when you withdraw the money (not loan), you have a penalty to pay to the IRS on your tax returns for that year on those funds plus the funds increase your overall income for the year putting you in a higher tax bracket. You are going to get hit hard if you are talking thousands of dollars. Our roof and a new window was $13,000 so I know you will be utilizing all of that IRA. It's a shame you have to toss all that pretax savings out the window and pay penalties and get hit with state and federal taxes. We got by for a 2 - 3 years and waited to refinance to do our roof.

[seekininfo]

thanks we are trying to figure out a way NOT to. But we have mold forming, so health risks. I was just wondering if we end up having to. When we would be able to.

My husband was a construction worker, so can do the work himself which will make it a lot cheaper.

One of the worst things you can do. When you have retirement accounts, you should forget you have them and just contribute to them as you can and not take out unless it is an extreme emergency. A new roof is not an extreme emergency unless one can see blue sky looking up as we had to have one replaced (25 years old) during our Chapter 13. As stated in previous postings, when you withdraw the money (not loan), you have a penalty to pay to the IRS on your tax returns for that year on those funds plus the funds increase your overall income for the year putting you in a higher tax bracket. You are going to get hit hard if you are talking thousands of dollars. Our roof and a new window was $13,000 so I know you will be utilizing all of that IRA. It's a shame you have to toss all that pretax savings out the window and pay penalties and get hit with state and federal taxes. We got by for a 2 - 3 years and waited to refinance to do our roof.

[Pandora]

just wanted to add - that since your husband is doing the work himself - call around to local building supply companies that sell to the public vs. going to a chain store (like Lowes or Home Depot). You can search online in your area for them and ask if the sell openly to the public.

Will save you alot more $ in the end