I am 67, still working part time, I need to borrow 30,000 from my 401k. Will I pay a penalty?

I am 67, still working part time, I need to borrow 30,000 from my 401k. Will I pay a penalty I have been in a living situation that has turned violent, and I must have him move out, I own my condo, but have depended on his income for living expenses, I would need to pay off some debt to be able to stay in my condo. Any advice is appreciated,Thank you Asked by curious2214 22 months ago Similar Questions: 67 working part time borrow 30 000 401k pay penalty Recent Questions About: 67 working part time borrow 30 000 401k pay penalty Business > Financial Planning.

Similar Questions: 67 working part time borrow 30 000 401k pay penalty Recent Questions About: 67 working part time borrow 30 000 401k pay penalty.

You can borrow from your 401(k) without penalty, but the loan must be paid back in five years. You are allowed to borrow, if your plan allows it, up to $50,000 or 50% of the balance in your 401(k) without penalty, because you are over 59 1/2. Make sure your plan allows part time workers to make loans. But, because of your age, you have to be careful in a couple of areas.

You have five years to pay back the loan. If you decided to stop paying the loan, it will be considered a distribution after 60 days, and you will owe income tax. You will not owe 10% penalty because you are over age 59 1/2.

You are allowed to continue to make contributions to the 401(k) as long as you are working, even past age 70 1/2. (Some plans don’t allow contributions if there is an outstanding loan. ) But, once you reach age 70 1/2 you must also start making required distributions at the same time you are making contributions.

And, you also have the loan to repay. If you decided to stop working before the five year payback, (unless you pay the loan back before you stop working,) you have 60 days to pay off the loan, or the outstanding balance is immediately considered income and you will owe income tax on the balance when you do you next tax return. If you decided to retire, you can roll the 401(k) into an IRA and then take as much or as little as you want.

By doing it this way, you are able to take smaller amounts from the IRA as you need the money rather than taking a larger amount that might be subject to a larger tax bite. Remember, if you stop working, the loan becomes a distribution and is added to all your other sources of income, including Social Security to determine your tax obligation. $30,000 would put you in the 15% tax bracket, but the next bracket starts at $34,000.

(25%). So as a percentage of income, you would owe about $4,100 on the $30,000 in the 15% bracket, not counting any other income you have. Since this is going to be a loan, you should make sure you set aside the tax in a special account ,just in case you have to stop work, (accident, illness, lay off, etc.) before you get the loan paid off.

This way there are no surprises at tax time if you have to try an come up with the money to pay the tax. This will reduce the balance in your 401(k) which will give you less money at retirement. But, since you have a dire situation, you safety is more important right now than have the extra money in retirement.

I would look for any other sources of money you may be able to find before using the 401(k). Perhaps you could qualify for a small home equity loan from your condo. If you use an equity loan to pay off some of your debt, and some of that debt is connected to condo repair, remodel, or upkeep, you may be eligible to tax deduct the interest on the loan.

Before you make the 401(k) loan, find out how much you monthly payment will be. (The payment is deducted directly from your paycheck. ) Then see if you qualify for a small home equity loan and see what that payment will be.

You might find the home equity loan payment less. And, you will have greater flexibility in paying the home equity line. You can pay more one month and just the minimum the next.

But, you have to be careful here as well, because if you stop work and can't make the equity line payments, you might risk losing your condo. So you have to weigh the pluses and minuses. 401(k)’s were not designed to be savings accounts.

They are retirement accounts. That is why the federal government has so many rules you have to satisfy when in comes to 401(k) loans.

Don't "borrow" from 401k I wouldn't "borrow" the $30,000 from your 401k. But you're over 62, so you can certainly start drawing from your 401k at this time. You could certainly draw out $30,000 this year from it.

You would only pay income tax on it. You might pay something like $6,000 in federal taxes, and then whatever your state tax is. You didn't say how much you have in the 401k.

If this is all the money you have in the world, you might think about a reverse mortgage. There are several different kinds of reverse mortgages but one is where you can simply withdraw money as you need it. Reverse mortgages gouge you with fees, but you can run the numbers to figure out how much you would need to withdraw a year and combined with the 401k see if you can make ends meet.

If your numbers say you could do this for 30 years, then you should be able to live out your life just fine. If you want to give me some numbers, you can send me a message privately and I can run them for you.

I don't think you will have penalties Most 401Ks were set up that you pay penalties if you withdraw BEFORE age 62. You surpassed that. Others will have you pay a small penalty if you invested in them less than 5 years.

Grouping you in my grandma/mother's day and age, chances are, you worked for over 20 years or worked some years and left your money in there over 20 years, so you avoid that penalty as well because you didn't touch it in less than 5 years and you are over retirement age. Good luck! .

1 Also, in addition, you could draw out the $30K and put that into an annuity and draw a check every month for the rest of your life and use that to pay for your condo and not have to worry about making ends meet. X-amount of dollars in an annuity generates X-amount of cash for you each month for X-amount of years, sometimes for the rest of your life...and that $30K is interest bearing so the chances of you running out of money probably would not happen for a long while, if ever. Depends on your financial adviser.

This user has been banned from Askville.

1 Also, in addition, you could draw out the $30K and put that into an annuity and draw a check every month for the rest of your life and use that to pay for your condo and not have to worry about making ends meet. X-amount of dollars in an annuity generates X-amount of cash for you each month for X-amount of years, sometimes for the rest of your life...and that $30K is interest bearing so the chances of you running out of money probably would not happen for a long while, if ever. Depends on your financial adviser.

Also, in addition, you could draw out the $30K and put that into an annuity and draw a check every month for the rest of your life and use that to pay for your condo and not have to worry about making ends meet. X-amount of dollars in an annuity generates X-amount of cash for you each month for X-amount of years, sometimes for the rest of your life...and that $30K is interest bearing so the chances of you running out of money probably would not happen for a long while, if ever. Depends on your financial adviser.

WEALTHADVISOR replied to post #1: 4 You can not make withdrawals from a 401(k) while you are still working unless it is a financial or non-financial hardship withdrawal, and the plan has to allow one. Some plans do not allow hardship withdrawals. You can only make withdrawals from a former employer 401(k) or her current employer if she is fully retired.

She says she owns the condo, not making payments on it. She is age 67 so her single life expectancy is 20 years. Depending on the settlement and payment options, this will pay her about $186/mo.

Not sure if that will be enough. A five year period certain annuity will pay her $528/mo. 10 years $296.

15 year $221.

You can not make withdrawals from a 401(k) while you are still working unless it is a financial or non-financial hardship withdrawal, and the plan has to allow one. Some plans do not allow hardship withdrawals. You can only make withdrawals from a former employer 401(k) or her current employer if she is fully retired.

She says she owns the condo, not making payments on it. She is age 67 so her single life expectancy is 20 years. Depending on the settlement and payment options, this will pay her about $186/mo.

Not sure if that will be enough. A five year period certain annuity will pay her $528/mo. 10 years $296.

15 year $221.

" "mY HUSBAND PASSED AWAY. CAN I CASH IN HIS 401K WITHOUT PENALTY? " "if I take a withdrawal from my 401k to buy my primary home do I still pay a 10 percent penalty?

" "If I rollover funds from an old 401k to my current companies 401k can I borrow from the added funds? " "I"m already 66 yrs. Old I like to cash out my 401K do I have penalty" "What's a good website to get a background report on someone?

And also not expensive since I am working part time. " "If I lose my job, can I use the employer match part to pay off a 401k loan and just zero it out? " "can I roll over an old 401k in to my 401k at my present employment without tax penalty" "I withdrew $11K for college.

I am no longer an employee, but left my 401K. I am 58. Will I have to pay the 10% penalty?

MY HUSBAND PASSED AWAY. CAN I CASH IN HIS 401K WITHOUT PENALTY?

I"m already 66 yrs. Old I like to cash out my 401K do I have penalty.

And also not expensive since I am working part time.

Can I roll over an old 401k in to my 401k at my present employment without tax penalty.

I withdrew $11K for college. I am no longer an employee, but left my 401K. I am 58.

Will I have to pay the 10% penalty?

I cant really gove you an answer,but what I can give you is a way to a solution, that is you have to find the anglde that you relate to or peaks your interest. A good paper is one that people get drawn into because it reaches them ln some way.As for me WW11 to me, I think of the holocaust and the effect it had on the survivors, their families and those who stood by and did nothing until it was too late.