“How can I get money out of my 401k” has become an increasingly more common question as financial pressures force more and more investors to turn to their retirement accounts as a source of immediate funds.
Whether or not you can withdrawal funds from your 401k account will depend on a variety of circumstances, with the termination of your employment and serious hardship being the two likeliest reasons you would be allowed to pull funds from your account.
If you are considering withdrawing money or cashing in your 401k, it is wise to consult with an expert, such as the retirement account specialists at ETrade, to find out which strategy is right for you and your financial objectives.
How Can I Get Money Out Of My 401k?: Employment Termination And Hardship Withdrawals
If you have terminated your employment for any reason, or if you die or become disabled you can get access to the funds in your 401k. When you end your employment with the company that holds your 401k you are qualified to access your money early.
How can I get money out of my 401k? If you pass away the money in your 401k will become available to your heirs, and you can also access your funds if you become permanently disabled.
You may also be able to withdrawal from your 401k if you are experiencing a grave hardship, and many plans offer this option for investors who meet certain specific circumstances. Purchases and high debt do not qualify you for a hardship withdrawal, as these are reserved for dire medical bill issues and foreclosure prevention.
Be prepared to show documentation of your emergency and for the possibility that you will only be able to access a small percentage of the total amount of funds in your 401k account. The Help Center at online brokerage ETrade can provide you the information you need to find out if your circumstance qualifies you for this type of withdrawal.
How Can I Get Money Out Of My 401k?
If you do not meet the requirements outlined above for withdrawing your money, and you are not yet 59½ years of age, you may have one other option if you want to know, “how can I get money out of my 401k?” Your plan may allow for you to take out a 401k loan on your funds which you will have to pay back according to the terms outlined in your plan.
While this option is considerably more advantageous then an outright withdrawal of your funds, it is not ideal for everyone. You may only be able to access a percentage of the total funds available, if you lose your job or terminate your employment the entire balance of the loan could be due in 60 days, and the funds cannot grow and compound while they are out of the account.
Some plans may even limit or cease new contributions to your 401k account while the loan is outstanding, further jeopardizing your financial situation.
The reality is that without a serious hardship, of the loss of employment, while your 401k money is technically yours, your access to it will be limited until you reach the age of 59½ and can begin to take penalty-free distributions from you account.
Always consult with a professionals financial adviser prior to withdrawing funds or taking out a 401k loan to see if it is a good fit for your investment objective.