Optimal way for withdrawing vested company match from my 401k?
It's possible that I'll be laid off in a few months.
Currently I have x + y in my 401k.
x = my personal contribution
y = my company match --> which is vested
Soon I'll make a fairly big personal, but important purchase. When I leave my job, I plan to withdraw my company's match. Plus I'm young, and have future earnings potential.
My logic is that I'd like to have the spare cash, plus I'll have my degree from an Ivy league school with solid work experience in software engineering.
Is there an ideal way to withdraw the company match 401k, or must I simply accept the 30% hit?
(2)2 Comments
Sorted by latest first Latest Oldest Best
You can borrow against a 401k for 5 years. This defers any penalty fees that the IRS mandates. Put the cash back in your 401k within those 5 years.
you can also solo administer 401k plans even if you have an unincorporated business, so you can start one of those if you have any other form of cashflow, and there may be a way to get the other plan rolled into your solo one.
www.irs.gov/publications/p560/ch04.html#en_US_publink10009053
Why would you want to withdraw only the company match, and presumably leave your personal contributions sitting in your ex-company's 401k plan? Generally, 401k plans have larger annual expenses and provide for poorer investment choices than are available to you if you
roll over your 401k investments into an IRA. So, unless you have specific reasons
for wanting to continue to leave your money in the 401k plan (e.g. you have access to
investments that are not available to nonparticipants and you think those investments
are where you want your money to be), roll over part (or all) of your 401k assets into
an IRA, and withdraw the rest for personal expenses. If your personal contributions
are in a Roth 401k, roll them over to a Roth IRA, but, as I remember it,
company contributions are not part of the Roth 401k and must be rolled over into
a Traditional IRA. Perhaps this is why you want to take those in cash to pay for
your personal purchase?
Also, what is this 30% hit you are talking about? You will owe income tax on
the money withdrawn from the 401k (and custodians traditionally withhold 20%
and send it to the IRS on your behalf) plus penalty for early withdrawal
(which the custodian may also withhold if you ask them), but the tax
that you will pay on the money withdrawn will depend on your tax bracket,
which may be lower if you are laid off and do not immediately take on a
new job. That is, the 30% hit may be on the cash flow, but you may get
some of it back as a refund when you file your income tax return.
Terms of Use Privacy policy Contact About Cancellation policy © freshhoot.com2026 All Rights reserved.