Home  >  Financial Articles and Q&A  >  I was laid off from Domtar how long do i have to wait...

I was laid off from Domtar how long do i have to wait before i can withdraw all my money from my 401k?

Mar 21, 2013 by Rafael from Dallas, TX in  |  Flag
3 Answers  |  4 Followers
Follow Question
5 votes

Rafael, Once separated from service you should be able to initiate a distribution or "roll-out" at any time. Contact your HR Department or retirement plan provider and they can walk you through the process. If you are unsure who to contact, see your last 401(k) statement and there should be a website or phone number to use for contact. Be cautious when withdrawing money from your retirement account as distributions are taxable if not rolled into another retirement account. Pre-mature distributions (before retirement age) will also incur a 10% penalty on top of ordinary income tax.

Comment   |  Flag   |  Mar 21, 2013 from Bay City, MI

1|600 characters needed characters left
3 votes

Most plans are participant directed, meaning that, you, as employee, get to select your investment choices. As long as the plan is participant directed, you can request a distribution right away. If it is not participant directed, you will need to wait until plan does their next valuation, possibly at year end.

Keep in mind that you are subject to income tax plus a 10% penalty if you are under 55. If it is at all possible, I would hope you could roll it into an IRA and not pay taxes. Try to keep this money earmarked for retirement. One day you will reach retirement age and, depending on how life treats you, may need it then more than you need it now.

If you need the distribution, contact your plan administrator. If you don’t know who they are , contact Human Resources and get their phone number. .

Comment   |  Flag   |  Mar 27, 2013 from Delray Beach, FL

1|600 characters needed characters left
1 vote
Jason Hull Level 20

Rafael--Sorry to hear about your situation; hope you can find your next job quickly. If you're under 55, you can't access the funds without paying a 10% penalty and having the plan administrator withhold 20% for taxes.

If there are hardship provisions in your 401k plan, you might be able to avoid the penalty (but not the taxes) if your situation falls under one of those provisions. The IRS has a FAQ page about hardship distributions, and you'd need to talk to your plan administrator.

Here's the IRS page: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Hardship-Distributions

Here's the page with info on Domtar's administrator: http://www.brightscope.com/form-5500/basic-info/118997/Domtar-Industries-Inc/120819/The-Domtar-Us-Salaried-401k-Plan/

Here's more on 401k plan distributions from the IRS: http://www.irs.gov/Retirement-Plans/Plan-Sponsor/401(k)-Resource-Guide---Plan-Sponsors---General-Distribution-Rules

Comment   |  Flag   |  Mar 21, 2013 from Fort Worth, TX

1|600 characters needed characters left