# 401k



## Bufferine (May 26, 2021)

Can we take out of our 401k? How and what penalties? Thanks.


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## Hardlinesmaster (May 26, 2021)

From another thread.
you have pay $75 fee+interest. I did it online on the target pay and benefits website. The amount depends on how much you’ve saved up, usually you can borrow up-to 1/2 of your savings. It can take up to 7 days to process, you either choose direct deposit or they can send a check. The repayments are spread out , you pay x amount back every pay cycle. Or you can pay it all back at once if you choose.Once you receive the loan you cannot take out more loans until the current one is paid off. The process is fairly simple.
Most financial advisors recommended against borrowing money from 401k, because some people are unable to repay the loan and you actually pay interest instead of earning it.
I had borrowed a small small amount and paid it back in a few months. I barely noticed the small deduction every pay cycle.
I hope you make it out of your slump, stronger. Just hang in there.
Thanks
@Planosss


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## Hardlinesmaster (May 26, 2021)

From irs.gov
Q7. May I repay a coronavirus-related distribution?​A7. In general, yes, you may repay all or part of the amount of a coronavirus-related distribution to an eligible retirement plan, provided that you complete the repayment within three years after the date that the distribution was received. If you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct trustee-to-trustee transfer so that you do not owe federal income tax on the distribution.

If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022. See sections 4.D, 4.E, and 4.F of Notice 2005-92 for additional examples.


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## Hardlinesmaster (May 26, 2021)

Q6. When do I have to pay taxes on coronavirus-related distributions?​A6. The distributions generally are included in income ratably over a three-year period, starting with the year in which you receive your distribution. For example, if you receive a $9,000 coronavirus-related distribution in 2020, you would report $3,000 in income on your federal income tax return for each of 2020, 2021, and 2022. However, you have the option of including the entire distribution in your income for the year of the distribution.


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## Hardlinesmaster (May 26, 2021)

The 10% premature withdrawal penalties are suspended. You'll still owe Federal, State and local income taxes on the money. They will have some tax withholding taken from the "cash out" of your 401(k) account, but usually the withholding amount isn't enough to pay the taxes due, particularly as the lump sum could bump you into a higher tax bracket.

Call the Target 401(k) people and find out if you have enough assets in your 401(k) to maintain your money within Target's plan. You might have a high enough balance required to avoid a "cash out". Leaving your money in Target's 401(k) simplifies matters when you join a new employer: you can then initiate a custodian-to-custodian rollover to the "new" 401(k) without incurring transfer-out fees.

You could request a custodian-to-custodian rollover to an IRA at a stock brokerage, credit union or bank. The downside to moving your 401(k) money to another custodian is if you will soon be joining a new employer's 401(k) plan, you might incur a transfer-out (ACAT) fee from the broker for a custodian-to-custodian transfer to the "new" 401k. You might also hit an IRA closure fee from the bank/broker/credit union. Those ACAT fees could run as high as $100, and another $50 for an IRA closure fee.

Of course, if you want to make your own investment choices, or if your new employer's 401(k) plan is lousy (i.e. high fees, no employer match), you might prefer a stock brokerage IRA. However, for many people a direct rollover from your "old" Target 401(k) plan to your new employer's 401(k) plan is the simplest choice.
Thanks
Cat and jack


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## xNightStockerx (May 26, 2021)

I took a loan out. I pay Bi-weekly to repay it back. It comes out of my check automatically. Like $60 every check. I did this about 3years ago. 
I had to take a "hardship" loan last year. That does not come out of my check. And when I did my taxes I wasn't penalized because of covid.


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## Bufferine (Jun 8, 2021)

NightStocker said:


> I took a loan out. I pay Bi-weekly to repay it back. It comes out of my check automatically. Like $60 every check. I did this about 3years ago.
> I had to take a "hardship" loan last year. That does not come out of my check. And when I did my taxes I wasn't penalized because of covid.


Is it under retirement where you apply to get the money out?


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## Planosss enraged (Jun 8, 2021)

Bufferine said:


> Is it under retirement where you apply to get the money out?


Loans, I believe.


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## Bufferine (Jun 9, 2021)

Planosss reborn said:


> Loans, I believe.


I found loans. Now I can’t see where to get the hardship loan. Do you know where or how to do that?


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## Planosss enraged (Jun 9, 2021)

Bufferine said:


> I found loans. Now I can’t see where to get the hardship loan. Do you know where or how to do that?


There two types of loans; personal loan , for up to half of your savings. Or Residential loan for up to half of your savings.


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## InboundDCguy (Jun 9, 2021)

Bufferine said:


> I found loans. Now I can’t see where to get the hardship loan. Do you know where or how to do that?


I believe they meant hardship withdrawal, which I think you have to call and talk to someone. You won’t pay that back but you’ll have to pay taxes on it, and possibly be penalized 10% on top for withdrawing early. There was a moratorium on the penalty due to covid, not sure if that’s still a thing or if they did away with it.


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## Bufferine (Jun 9, 2021)

InboundDCguy said:


> I believe they meant hardship withdrawal, which I think you have to call and talk to someone. You won’t pay that back but you’ll have to pay taxes on it, and possibly be penalized 10% on top for withdrawing early. There was a moratorium on the penalty due to covid, not sure if that’s still a thing or if they did away with it.


I found it. The hardship for corona is over.  I was surprised that if you withdraw for medical they ask for all the info. Why? Do they write the check to the hospital directly?


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