ULPT request. Get money out of 401k
Posted by cenadog@reddit | UnethicalLifeProTips | View on Reddit | 63 comments
So my 401k company (principle) won't let me borrow or take money out of my 401k unless it's a hardship withdrawal. Trying to find a way to get a few grand out of it. It does say home repairs is allowed. Just curious if anyone has had luck getting money out that way without them looking too deep (water heater is old) or paying the repair company themselves. Or any other ideas to be able to take a bit out of my 401k.
rdking647@reddit
one thing to be aware of. If you take moneyout of the 401k before age 59 1/2 in a hardship withdrawl you will still have to pay taxes on it. your normal income tax rate plus an extra 10% penaly on the amount taken out. so is you take out 10k and are in the 15% bracket you will owe 2500 in taxes
c0l245@reddit
Loans against your 401k are not; you pay them back, with interest to yourself, over time.
IGotMeatSweats@reddit
If the loan repayment terms exceed 5 years, it becomes taxable. Unless it's for a home purchase, which can allow for a 20-year repayment period.
c0l245@reddit
Rules so complicated, it's almost like they want us to make a mistake!
Displaced_in_Space@reddit
No, it's more like they really, really want you to disuade you from doing it!
c0l245@reddit
Absolutely.. stay poor in the casino stock market instead of investing in real estate or loaning your money to someone to buy a house with interest!
Displaced_in_Space@reddit
Huh? What an odd soapbox comment. No one’s forcing you to save your money in a 401k. It’s just one vehicle for handling your finances.
This isnt a philosophical thread. It’s a practical one.
c0l245@reddit
All I did was build on your admission that they want your cash to keep feeding the stock market.
Like, DUH,
nObODy iS fOrCINg YoU. SpongeBob.jog
If you're gonna waste your life replying to comments, at least say something worthwhile. Like, as if people have guns to their head being forced to do a 401k. Smh.
No, just every financial incentive is aligned with you feeding the casino. Rtard
ROFLmyWOFLS@reddit
It’s a “casino” if you treat it like one.
Otherwise, I guess you feel all investing is a casino unless it’s real assets? Lol
c0l245@reddit
I have a feeling that you have a layman's understanding of how the stock market works, nothing more.
Do you think that you "own" and stock? If so, how do you own it?
ROFLmyWOFLS@reddit
Over a decade working for a broker, series 7/66 holder, etc… sure I don’t know anything about financial markets.
So you could have said “yes, I only believe in ownership/investments in real assets” like I had asked. No need to ignorantly grandstand.
I know your laymen understanding of ownership was going in a different direction than trying to make a nit-picky point like “held in street name” vs. DRS vs. certification, so go ahead and clarify exactly what your “gotcha” point is and I’ll see if I can level with you.
Edit: I stand corrected, after going through your hilarious amount of interaction with penis-size subreddits, I see you DRS’d a chunk of GME a few years back lmao. So my exact original point: ITS A CASINO WHEN YOU TREAT IT LIKE ONE, like when you aped out on GME lol.
c0l245@reddit
Thanks for your interest in my profile.. wow, you really went back a ways! You seem like a busy person.
So, real question, why is me talking about my big dick such an issue for people, like you? Please don't request a pic.
How is the market NOT a casino?
Yes, I prefer durable assets, but recognize that there is money to be made all kinds of ways..
ROFLmyWOFLS@reddit
Just found it comical to be getting half-baked arguments from someone who spends his days posting content to a subreddit focused on dicks 😂 Idgaf, do you, not an issue to me.
I’d suggest you go read some books on how equity ownership works if you really don’t understand. Is private equity a casino? Are partnerships a casino? Does it become a casino only after you lose majority stake in said partnership? Is a money market “gambling”? Are bonds markets, or other fixed instruments for that matter, a “casino”?
Casinos have set odds, no equity stake. Literal gambling.
Equity Markets are the opposite, undefined odds (only worth what the next guy is willing to pay, based on all available knowledge and priced efficiently), alongside innumerable other differences.
Equity is literally synonymous with ownership. Shares of an equity provides fractional ownership of that entity. Buy enough of it and you can call the shots unilaterally, look up what a hostile takeover is. (If you don’t own shit, how do you execute a hostile takeover…? 🤣)
When you drink the koolaid and ape out on GME short squeeze hype, I’m not overly shocked that you have that knee-jerk opinion.
So in a layman view, it’s a casino in a sense of “I can make or lose money.” If that’s your way of saying there’s risk, yes, but it’s wildly different than a casino.
Godspeed out there bud.
c0l245@reddit
You're only arguing with yourself bro, I'm just asking your dumbass opinion to see if you have a full cookie baked in your brain, if you are splitting hairs in the term "casino" (which you are), or if you genuinely have no idea wtf you're talking about.
First, thanks for telling me to read a book, I'd have never thought of that! So insightful! You're a wizard of knowledge.
"A casino has set odds and the stock market doesn't" isn't really helping your argument.. there are no set odds at hold'em as you bet against bluffing players, or the odds are unknowable. THATS the analog, not the craps table. Smh. I'm not shocked you picked tells easiest, stupidest example to try and make a point. You might consider that set odds could actually be BETTER than no set odds.
The stock market, pricing is fair? Lool.. that's a doozy. You're buying a set percentage of equity? Hahaha, naked shorting, share pooling, and failures to deliver would like to have a word.
Anyhow, glad you got to learn about big dicks through all of this.
Be good!
ROFLmyWOFLS@reddit
You ask a 1-liner of “how is it not a casino” and claim I’m splitting hairs by addressing your vague assertion 7 different ways. “THATS the analog! Not your stupid logic” after regurgitating the layman explanation I literally just addressed for you. Keep your eye on the balls, I know you can do that 😂
Fraud happens in any market, sounds like you chugged so much GME kool-aid you think the entire market is rife with ownership fraud. Sorry your MOASS-Messiah never delivered you to the moon. Not even disagreeing with you that there’s fuckery with HFTs/FTDs/naked shorting; shit is rank but nowhere near as common as you’re painting. Should be stopped outright/stemmed as much as possible at any rate. (Fake gold bars exist, bad contracts with real property exist, shady dealings are everywhere.)
Not really sure what your gripe is with share pooling 🤷♂️
Naked shorting penalties should be way stiffer when clear intent/proof is established.
Busted trades happen… rare, annoying, and seemingly one-sided? Yes, also not fighting you on that. Does that mean “ownership is a lie”? No lol, you never own it prior to settlement. (If someone writes you a hot check, you don’t own that money yet. Inversely, if you get a check and it clears, you do in fact own it. Feel free to DRS(safe deposit box), certificate (withdraw cash), etc. once you own it. You can feel better while sacrificing liquidity/market access if you’re paranoid. This is the analogy you are looking for.)
If you reframe your gripe you’d probably be better received. You’re lumping equity ownership (end result) into the same blanket view of “fuckery can be exploited in pursuit of ownership”. Two different issues.
Do you feel the same about private placements/alts?
Real property is subject to imminent domain, do you really own property? (It’s rare, but I can happen!)
yowen2000@reddit
In general i agree with you, but in this case, those rules are pretty damn clear. If you don't research before doing something as drastic as taking a 401k loan or making an early withdrawal, that's on you.
isvaraz@reddit
The repayment also counts against your annual allocation, meaning if you repay $5k that is $5k less you can deposit as “new” money.
TheStig15@reddit
This is incorrect fyi, loan repayment do not count against the annual 402g limits
rdking647@reddit
Op said his company doesn’t allow loans
c0l245@reddit
Move the 401k balance to IRA Financial.
-LucidDreams@reddit
Regardless of your age you will need to pay taxes on 401k withdrawal and only penalty free after age 59 1/2.
AdministrativeAd2948@reddit
And if your lucky enough to live in a state like Wisconsin they may hit you with a 10% penalty on top of the federal 10% penalty for early withdrawal.
ROFLmyWOFLS@reddit
Over a decade working for a broker, series 7/66 holder, etc… sure I don’t know anything about financial markets.
So you could have said “yes, I only believe in ownership/investments in real assets” like I had asked. No need to ignorantly grandstand.
I know your laymen understanding of ownership was going in a different direction than trying to make a nit-picky point like “held in street name” vs. DRS vs. certification, so go ahead and clarify exactly what your “gotcha” point is and I’ll see if I can level with you.
BananaNo9@reddit
Rollover into an IRA and withdraw as much as you want maybe?
Phone_Pristine@reddit
Depends on how your plan behaves. There are irs guidelines that the plan has to be compliant. I have seen people get a quote from a company and submit it for the amount you are requesting.
One-Humor-4284@reddit
I was able to pull as much as I wanted at any time. I have a regular checking account over seas. I just asked my 401k to do a qualify rollover. It’s a check to that bank FBO Me… deposit, wait hold days. Done.
Necessary-Tale-4070@reddit
Convert some of it to an IRA. You can withdrawal up to 60 days no penalty.
sexyshadyshadowbeard@reddit
Don’t borrow from your 401k. It’s stupid and it’s risky.
TONYSTARK63@reddit
Most 401s I believe will let you take a distribution but you will get heavily taxed or you could do a loan and pay it back through weekly deductions.
ki4clz@reddit
who handles the account…?
Fidelity, Schwab, etc…?
cenadog@reddit (OP)
Principal.
ki4clz@reddit
no loans…?
cenadog@reddit (OP)
Nope. Not offered by my company. Only hardship withdraw.
TheyreEatingTheD0GS@reddit
You are able to take out $10,000 each year if you are a victim of domestic violence. The choices are physical, emotional or financial abuse.
ki4clz@reddit
well… just bite the bullet and take the hardship- they’ll probably knick ya for 20%
msvictora@reddit
We’ve done it and just had to write a letter of what our hardship was, we made something up. We needed the money and couldn’t afford worrying about the penalties so did it. I don’t regret it. Is your 401k thru an employer you could possibly do a loan thru?
cenadog@reddit (OP)
They don't do loans unfortunately. Just hardship withdrawals
chevydellglade@reddit
Oh look, you're behind thousands on your mortgage and are at risk for foreclosure :). I had a friend who had a friend help with something similar. They just need a letter on company letterhead or notarized. Do with that as you may.
watchOS@reddit
Isn’t it possible to withdraw $1000 per calendar year for emergency expenses? From what I understand, the only cost to withdrawal is taxes, and that you should still have more than $1000 afterwards.
bjketter@reddit
Taxes you will need to pay are income tax at your normal rate plus a 10% early withdrawal penalty. What you are talking about is tax fraud. If you get caught, it will be much worse.
That being said, if you just tell them it's for school costs or one of the other listed hardship withdrawal qualifications, the plan doesn't require more proof, if the IRS doesn't ask, you will be fine.
Poodleape2@reddit
This is incorrect, its not tax fraud unless he fails to claims it on his taxes. If he pays the 10% penalty and the taxes as income its fine. The 401k plans rules and tax law are not the same.
bjketter@reddit
Correct if he pays the penalty but that's going to be problematic when he lied about how he got the money out. I guess he will have to calculate everything himself and make sure to pay out all. They will only withhold what he tells them and usually it's not enough.
JohnKerryTouchedMe@reddit
Roth IRA you can take out whatever you want once a year as long as you put it back within 90 days I believe. Someone will need to fact check. I would, but I'm just too fucking rich
yowen2000@reddit
With a Roth IRA you can take out the principle whenever you want, but if you want to take out the gains, you get fees and taxes.
banalprobe96@reddit
It doesn’t hurt to check the exact amount you’ll lose to taxes. Looks like 15% or so might be about it, which really isn’t that much depending on your state. The myth is the penalty is “a lot”, which is just fear mongering. Investment companies make millions with your 401k dollars, it’s yours to withdraw if you want. I closed mine out a few years ago in my late 40’s to finance opening a business. The penalty was far less than getting a bank loan and paying interest on it over the course of years.
yowen2000@reddit
You must've been comparing to loans with some brutal damn terms.
AdministrativeAd2948@reddit
Depends on the state. I had a large loan from buying my first house and then changed jobs without the funds to pay it back when leaving. I'm in Wisconsin, and they hit you with 10% penalty as well as the federal hitting you for a 10% penalty for early withdrawal. That is a lot, in my opinion.
Turbulent_Notice_207@reddit
They don't ask for proof of hardship, just sayin'. The IRS might when you get audited. But then apologize and pay fines. If you're desperate, it's worth the risk.
IdubdubI@reddit
Don’t. But if you must, you might be able to start a rollover and never complete it. Be prepared for a big tax penalty. You should definitely leave that money there for retirement though.
cenadog@reddit (OP)
I don't wanna but has some bills needing to be paid and work slowing down. How would the rollover work? Last time I did one they wanted to do it all digital.
Intothefloodagain13@reddit
Can't you just take out a loan against it? I did this numerous times at my old job.
cenadog@reddit (OP)
Nope. They won't let us. My old job let us but this new one won't. Only hardship withdrawal. Which is lame
Poodleape2@reddit
Can you get a part time job?
IdubdubI@reddit
Might be an option for you to receive a check that you’re supposed to forward to the rollover account. The checks are usually made out to benefit of you, but at the institution. It probably won’t work. You shouldn’t try it.
It sounds like you might be able to convince them that you have a qualified hardship.
badjoeybad@reddit
practically impossible. they're fiduciary custodians. IRS penalty for allowing tax cheating. you will end up paying taxes no matter what on a withdrawal.
Retrograde_Bolide@reddit
This is usually a really awful idea. There are a lot of tax penalities you will have to pay
KronktheKronk@reddit
Most 401k programs have a "loan yourself money" program where the principal comes out of your 401k and so the payments+interest you pay go back into it.
sandysadie@reddit
Get an estimate for emergency home repairs
sr1115@reddit
Look into loan options. If your plan allows loans, I think you should be able to take up to 50% of your vested balance, up to $50k. That way you’re repaying yourself.
cenadog@reddit (OP)
Nope. My old company offered that but my new one only does hardship withdrawals
President_Chrump@reddit
I had a 403b that had a couple grand wrapped up in it
I used a quote for a radon mitigation system + included documentation of the hazards of radon in my paperwork and it was approved
cenadog@reddit (OP)
Did they just give you a check to pay for it?
President_Chrump@reddit
Sent me a check
I requested all of it ($3400?) with a small % early withdrawal fee and then I had the option for them to withhold taxes on it (which I did)