401k withdrawal

[gocubsgo2300]

When taking a withdrawal from an employer 401k or an IRA after 59 1/2 do you have to pay it back?

[parafly]

Here are the distribution rules for a person 59 1/2+ as I understand them.

- You can withdraw from an IRA without penalty.
- You can withdraw from a 401K with an old employer without penalty.
- You may be able to withdraw from a 401K with a current employer without penalty. Check with your plan administrator to see if the plan allows for an "in-service" withdrawal. Some plans allow it and some plans do not. If your plan does not allow it, you will be subject to a 10% early withdrawal fee.

In all cases, you are subject to federal, state, and local income taxes.

In terms of "paying it back," this only applies to loans, not distributions. You can take a loan from a 401K, but you cannot take a loan from an IRA.

[corn18]

Here are the distribution rules for a person 59 1/2+ as I understand them.

- You can withdraw from an IRA without penalty.
- You can withdraw from a 401K with an old employer without penalty.
- You may be able to withdraw from a 401K with a current employer without penalty. Check with your plan administrator to see if the plan allows for an "in-service" withdrawal. Some plans allow it and some plans do not. If your plan does not allow it, you will be subject to a 10% early withdrawal fee.

In all cases, you are subject to federal, state, and local income taxes.

In terms of "paying it back," this only applies to loans, not distributions. You can take a loan from a 401K, but you cannot take a loan from an IRA.

Excellent reply from parafly. I will only add that if it is a Roth 401k and/or Roth IRA that there are additional considerations and you may not owe any taxes or penalties. If it is a Roth conversion (sometimes called a back door Roth or mega back door Roth), then there are another set of rules that are much too complex for me to understand much less explain. If they are conversions (not rollovers), I would consult a tax expert for advice.

Tom