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401K question - should be easy

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C

COCHISE

Guest
This is both a New York and California question. I hope this is the correct place to post it.

I have a good amount of money in a 401K account held by a former employer who is based in New York. I worked for this company in a California office that has been closed. The account is managed by a well known national investment firm.

My question; I have an immediate need to access this 401K account but the former employer will not allow me to access the funds. I am told that the monies will not be released to me until I am age 65. I am
being bounced around like a ping pong ball.
I need the money (see other posts by Cochise)
and I don't know what to do.

Thanks in advance,

Cochise
 


I AM ALWAYS LIABLE

Senior Member
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by COCHISE:
This is both a New York and California question. I hope this is the correct place to post it.

I have a good amount of money in a 401K account held by a former employer who is based in New York. I worked for this company in a California office that has been closed. The account is managed by a well known national investment firm.

My question; I have an immediate need to access this 401K account but the former employer will not allow me to access the funds. I am told that the monies will not be released to me until I am age 65. I am
being bounced around like a ping pong ball.
I need the money (see other posts by Cochise)
and I don't know what to do.

Thanks in advance,

Cochise
<HR></BLOCKQUOTE>


My response:

1. If you leave a company and take a check for your retirement money, 20 percent of the money will be withheld to cover potential federal taxes. But you have to redeposit 100 percent of the money into an IRA account or another 401(k) plan within 60 days or lose nearly half of it to federal and state taxes.

2. You can avoid withholding with a trustee-to-trustee transfer of your money. If you leave your job, instruct your former employer to send the retirement money directly to an IRA account or the 401(k) plan at your new employer.

3. Don't spend the retirement money, or you'll end up with a huge tax bill. If you think you may need the money, put it in an IRA, then withdraw only what you need.

4. Use dollar-cost averaging if you're going to put your money into a stock or bond mutual fund. Put the money into a money market IRA account, then transfer the money gradually into other funds over 12 or 18 months. This protects you from the ups and downs of the market.

5. If you transfer a 401(k) payout into an IRA, keep it separate from any previous or future IRA you may have. If you do, you are permitted to move it later into another company's 401(k) plan.

Good luck.

IAAL


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