I have a 401k that I have invested 6%in for over 40 years with fidelity. I have over 300k in it.
I am over 60 and am not planning on retiring for several years. I recently needed $4000 for an airconditioner and when I went to take it, the tax was going to be $586! Is it better to take it out with the taxes taken or add it on to my income at the end of the year? I work part time and don’t want to take it as a loan and have to pay it back.
Terry Says: I’m not quite sure I understand your situation. I assume you’re still working for the company that sponsors the 40l(k). (Otherwise you could roll it over to an IRA, and since you are over age 59-1/12 you could make a withdrawal without penalty, and only owing income taxes.) Are you saying that because you are a part-timer the company will allow a withdrawal, but insists on withholding taxes?
If I have misunderstood your question please write back. I am not aware that 40l(k) plans withhold taxes on loans from the plan. But any loan must be repaid (check with the plans about the specific repayment terms) or you will owe taxes on the money if it is not repaid on time, or if you leave your employer.
As a general rule, I discourage borrowing from a 40l(k) because people have problems repaying — and because although you must repay with an interest rate set by the plan, you are losing the tax-deferred growth on the money that should have been in the plan!