Generally distributions from 401k
plans are subject to the 10% early distribution penalty if you make the distribution
before turning age 59 ½. However, unlike
IRAs, an exception to the 10% early distribution penalty applies to withdraws form company
401k plans. Basically, if you’ve reached age 55 and have separated from
service (left the employer), you can make a withdraw and escape the 10% early distribution
penalty but, unfortunately, you will still be subject to payment of federal and
possibly state taxes on the amount distributed.
Therefore, it may be best to
transfer you former employer 401k to a Self-Directed Solo 401k and subsequently borrow from it through a Solo 401k loan. The use
of a Solo 401k loan will alleviate you from having to pay federal or state
taxes since you will ultimately pay the Solo 401k loan back, either monthly or quarterly. To learn more about Self-Directed Solo 401k loan visit:
No comments:
Post a Comment