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How do I draw out 401K funds in full?

I am no longer employed with the company.

Jun 15, 2015 by Elizabeth in  |  Flag
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4 votes

Hi Elizabeth,

Depending on your plan administrator's procedures you may be able to simply call and request this transaction over the phone. You can generally find this information on statements or on your company's 401k plan website.

However, you may want to explore your options first; typically these are:

  1. Should you "cash out" and have the funds paid directly to you, which means you'd have to deal with taxes and or penalties depending on your age;
  2. Rollover the funds to a Rollover IRA where you can retain tax deferral of the funds and allocate them according to your goals;
  3. Roll them into your new employer's retirement plan if allowed.
  4. Do nothing and contingent on your plan rules, leave them in your current 401k

The right choice depends on multiple factors and I'd encourage you to consult with your financial advisor or a CFP practitioner for further guidance.

My best,

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Michael Baker Level 7

Good day Elizabeth,

Perhaps you could clarify whether you'd like to liquidate your account, or simply move the account away from your old 401(k) plan, say to an IRA or a new employer's plan.

As Jorge said, if you withdraw the money you'll be forced to pay taxes on that amount, as well as a penalty depending on a number of factors. If you roll those assets into an IRA or a new employer plan, you can continue to defer taxes.

I've found the most successful way to accomplish this task regardless of what you choose to do is to contact the plan administrator (fidelity for example) and explain what you'd like to do. They'll be familiar with the procedure and can assist you.

If you're looking to establish an account to roll the 401(k) assets into, finding an advisor to assist you in that can be a smart choice, as they can walk you through all the options available to you.

Cheers!

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