Ask Terry Questions 40lk withdrawal for need

40lk withdrawal for need

By Terry Savage on May 19, 2019 | Credit/Debt

I need to no can I with drawl for my 4olk one I already have a loan and you can only have one but I need Money because I am off of work
Without any income and they say you can withdraw from your 40lk if you are 59/12
So I need some advice

Terry Says

OK, the worst thing you can do is withdraw money from your 40l(k) in this situation.  I understand that it might seem like your only alternative, but it could have disastrous consequences.

First, if you already have a loan outstanding, and no longer work for the company, the amount of the loan will ALL be considered income in the year in which you left the company.  Since you are already 59-1/2 there will be no 10 percent penalty —  but you could receive a hefty tax bill for the money you already took out.  Check with the company HR department to see if they are going to send you a 1099 statement of income.  You don’t want to be unprepared for this.

Second, if you take more money out, you will be taxed on that withdrawal at ordinary income tax rates.  That could all  add up to a big chunk of taxes you will owe the government.

My suggestion is that you contact the National Foundation for Credit Counseling at 800-388-2227.  The are a non-profit and you can trust them. The nearest local agency will respond to you.  Go in and have a meeting, and listen to their suggestions.   And please write back and let me know what happens.




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