Day: July 11, 2017

Ten Ways to Take Money Out of Your 401k Without Penalty

Some people look at their 401k plan as an untouchable entity that needs to be left alone until their retirement, but those who rely on a company like Bennett Group Financial Services know that this does not have to be the only option. There are several ways of getting money out of one’s 401k without incurring the 10% penalty, and though not all of them are ideal, it is nevertheless important to know about them — they can come in handy in times of need.

  • Traditional Way

The most common way of getting the money is waiting until you are 59 ½ years old. This obviously does not warrant any penalty.

  • Age 55 Exception

If you leave your job after you turn 55 years old, you can withdraw the money without being penalized.

  • Age 50 Exception

The age 50 exception is similar to the age 55 exception. There is one difference between the two though, which is the fact that this exception is mostly available for those who had a public safety profession, like being a police officer or a firefighter.

  • Required Minimum Distribution

If you reach the required minimum distribution, you also become eligible for the money. Sometimes this exception is available for those who inherited a 401k.

  • Death

This is obviously not an ideal scenario, but if you die, the beneficiaries can take distributions out of the 401k without having to pay any penalty for it.

  • Disability

Having a disability also allows someone to get money out of their 401k, but the IRS’s definition is very strict for this exception, as only those who are “totally and permanently disabled” can take advantage of this option.

  • High Unreimbursed Medical Expenses

If you had medical expenses that were not refunded, you may be eligible to take the money out of your 401k, but only a limited amount, which in practice, means 90% of the expenses.

  • IRS Levy

When the IRS charges an account for unpaid taxes or imposes on it a levy, withdrawing money from the 401k may not be penalized.

  • Auto-enrollment

Those who have a 401k plan with auto-enrollment can take certain distributions – if they do not want the enrollment anymore – without being penalized for it.

  • Divorce

If the divorce decree involves the 401k among the dividable assets, you can take the money out penalty-free.

In addition to these situations, there are additional circumstances that allow you to get into your 401k penalty-free, and an investment advisor company like Bennett Group Financial Services can help you discover them.

Visit    https://bennettgroupfinancial.wordpress.com     to know more.