I am looking to get access to some of my 401k dollars as I may want to take a partial early withdrawal. I was advised I could roll over to an IRA and then take what I need as a withdrawal from the IRA. What are the penalties associated with this and what are the other options? (Note: I am currently in talks for a new position but currently unemployed so a rollover to an employer 401k and then a loan is not an option at this time.)
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There are no taxes or penalties on a rollover to a Traditional IRA. You should have the 401(k) administrator make a trustee-to-trustee rollover to avoid mandatory 20% tax withholding on a 401(k) distribution. You would receive a 1099-R for the year that the rollover took place with a code "G" in box 7 if it is a trustee-to-trustee rollover.
Any distribution from the Traditional IRA would be taxed as ordinary income and subject to a 10% early distribution penalty if under age 59 1/2.
There are no taxes or penalties on a rollover to a Traditional IRA. You should have the 401(k) administrator make a trustee-to-trustee rollover to avoid mandatory 20% tax withholding on a 401(k) distribution. You would receive a 1099-R for the year that the rollover took place with a code "G" in box 7 if it is a trustee-to-trustee rollover.
Any distribution from the Traditional IRA would be taxed as ordinary income and subject to a 10% early distribution penalty if under age 59 1/2.
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