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/quotes/zigman/1709939/delayed 2,540 +2 0.07%
Euro
/quotes/zigman/16008136/realtime/sampled 1.13 -0.01 0.61%
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/quotes/zigman/16008150/realtime/sampled 113.25 +0.83 0.74%
Pound
/quotes/zigman/16008140/realtime/sampled 1.45 +0.00 0.18%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 0.00 0.04%
DXY Index
/quotes/zigman/1652083/delayed 95.97 +0.36 0.38%
WSJ $ Idx
/quotes/zigman/41508961/realtime 88.99 +0.23 0.26%
U.S. 10yr
/quotes/zigman/15866666/realtime 1.75 0.00 0.00%
German 10y
/quotes/zigman/15866409/realtime 0.26 +0.07 37.97%
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Symbol Price Change % Change
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GOOG /quotes/zigman/59527964/composite 682.40 -0.71 -0.10%
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C /quotes/zigman/5065548/composite 37.54 2.56 7.32%
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T /quotes/zigman/398198/composite 36.47 0.26 0.72%
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5 yr CD
1.3%
2 yr CD
0.7%
1 yr CD
0.6%
MMA $10K+
0.2%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.96% 11.96% 11.62%
Business 13.12% 13.12% 12.85%
Student 13.42% 13.42% 13.14%
Balance Transfer 14.35% 14.35% 14.12%
Airline 15.17% 15.17% 15.10%
Cash Back 15.20% 15.26% 15.27%
Reward 15.25% 15.28% 15.14%
Instant Approval 18.02% 18.21% 18.00%
Bad Credit 22.56% 22.88% 22.73%
Source:CreditCards.com

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Encore
A blog about living in and planning for retirement

Penalty-Free Ways to Raid a 401(k)

Thinking about raiding your retirement funds? There are ways to do so without triggering the dreaded 10% penalty on early withdrawals.

First a little background. When you save in a tax-deferred 401(k) or Individual Retirement Account, Uncle Sam lets you contribute money on a tax-deferred basis. You don’t have to pay income taxes until the money is withdrawn. To encourage people to save for retirement, the IRS imposes a 10% penalty on those who break into these accounts before reaching age 59 1/2.

But there are ways around the 10% penalty.

For example, if you leave a company in the year in which you turn 55 or older, you can take penalty-free withdrawals from a 401(k) plan. (The distribution would be taxable, of course, but the 10% penalty would not apply.) The rules are strict: If you are 54 when you leave your job, you can’t escape the 10% penalty–even after turning 55.

Be aware that you can only take penalty-free distributions from the 401(k) account of the employer you left on or after your 55th birthday.

If you are laid off between ages 55 and 59 1/2 and anticipate needing some of your retirement money to make ends meet, it’s a good idea to leave at least part of your savings in your 401(k) plan, rather than rolling it over to an IRA, says Ed Slott, an IRA expert in Rockville Centre, N.Y.

401(k) owners “should always leave more in the (401(k)) plan than” they might think they will need, he says. People “always seem to need more money than they think.”

There are also ways to avoid a 10% penalty with an IRA.

IRA owners, for example, can take so-called 72 (t) withdrawals. The advantage to these is that you can start them at any age. The downside: Once you start taking 72 (t) withdrawals, you must continue for either five years or until you reach 59 ½–whichever is longer. That means a 58-year-old is locked into receiving annual payments until age 63. A 35-year-old faces 24 1/2 years of drawdowns. Moreover, because the payments are calculated according to actuarial tables, you won’t have flexibility to adjust the amounts. (You can do it with a 401(k), but you must have left the company first.)

Yet another way around the 10% penalty applies to IRA owners who are unemployed. They can take distributions from a SEP, SIMPLE, Roth or traditional IRA to pay health insurance premiums for themselves, a spouse, and/or dependents. (Note: You cannot do this with a 401(k).)

Be sure to follow the rules, says Mr. Slott. For example, to qualify, you have to have received unemployment compensation for at least 12 consecutive weeks, he says. Moreover, you must take IRA distributions either in the same year you receive unemployment benefits or in the following year, he writes. And you must pay your health insurance premiums in the year you take the distributions.

Self-employed people who don’t qualify for unemployment benefits, can take advantage of penalty-free withdrawals, too, provided that “they would have met the unemployment benefits requirement had they been an employee,” Mr. Slott writes.

Comments

We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 12)

View all Comments »
    • YE3mlK kdanozcuecaa

    • Libitard retail flow is the worst iniodatcr, they dumped stocks March 2009, Dumped Munis January 2011 and bailed out of Junk the last two weeks. They wait till there is blood in the street then sell and go to cash. For instance, two months ago an AMR bond was a good deal at 9% but today at 33% is a bad deal. AMR has issued no financials during that 60 day period. Only rumours.

    • That is a fantastic idea. Organization is key, Johnny (Please note: This rensospe in no way represents Personal Money Network’s views on marital fidelity, the value of spreadsheets or the relative tastiness of McDonald’s hamburgers and bird lumps).

    • “It’s my money and I want it now!!!”

    • For plans that have the in service, non-hardship distribution option, it is a great way to move funds tax free away from restrictive 401k plans and into a self directed IRA. Then using the 72t or 72q IRS regs may help acheive one’s liquidity goals without the peanlty for pre 59 1/2 withdrawals.

About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.

MarketWatch - Stock Market Quotes, Business News, Financial News
Bulletin
Investor Alert
need to know
Kohl's tells 3 top execs their positions are cut
Pope Francis in Cuba for historic meeting
Shake Shack plans to open in St. Louis
Zika vaccine is at least a year and a half away
10 big stories you’ve missed this week
Penney responds to lawsuit over Burberry plaid
Mattel names new boss for Barbie business

It’s a ‘new Cold War,’ warns Russia PM

Bank of America chief gets a 23% pay raise
Intel lured Qualcomm exec with $25 mln pay
CEO Jamie Dimon’s $26 mln bet on J.P. Morgan

I want my disabled sister out of our family home

Google exec squirms when questioned about pay

ECB may finally deal a deathblow to the €500 bill
Yen has crossed a ‘line in the sand’
Time for a coordinated response to the yuan?
Dollar to hit ¥95 by end of the year: Barclays

This can’t be why Apple made Beats deal with Dre

5 things to know about the Costco and AmEx breakup

How grocery business got ‘barbell’ shape

Dispute over safety claims costs Uber $28.5 mln

What bear market? Stocks look likely to rise

5 signs we might already be in a bear market
Looks like time for bottom fishing in stocks

Grammys make Memphis candy shop a winner

Economists increasingly see Fed hands as tied
What central-bank failures mean for investors
Have central banks lost market credibility?

How I paid off my student loans early

College freshmen most liberal since Vietnam

Big banks are fleeing the mortgage market
Big banks are fleeing the mortgage market
Boomers are loading up on debt, not millennials

Why you probably won’t see 99 cent gas

Taxpayers already paying for future Super Bowls

Beer’s incessant infighting clouds the big picture

How to buy a used car
The correct way to go about buying a used car

Don’t get smoked by your marijuana investment

Actually, the most popular new emoji isn’t the taco
/conga/frontpage.html 367881

Markets »

132.55MDow Volume:
Avg Vol: 132.70M
Unchanged
134
Decliners
1500
Advancers
4873
Price Chg %Chg 1 Day
Range: 1 Day
  • 1 Day
  • 5 Days
  • 1 Month
  • 3 Months
  • 6 Months
  • 1 Year
  • 2 Years
Dow
/quotes/zigman/627449/realtime 15,974 +314 2.00%
Nasdaq
/quotes/zigman/12633936/realtime 4,338 +71 1.66%
S&P 500
/quotes/zigman/3870025/realtime 1,865 +36 1.95%
GlobalDow
/quotes/zigman/629063/realtime 2,070 +23 1.11%
Gold
/quotes/zigman/33772884/delayed 1,239 -9 0.75%
Oil
/quotes/zigman/2260836/delayed 29.02 +2.81 10.72%
FTSE 100
/quotes/zigman/3173262/delayed 5,708 +171 3.08%
DAX
/quotes/zigman/2380246/delayed 8,968 +215 2.45%
CAC 40
/quotes/zigman/3173214/delayed 3,995 +98 2.52%
FTSE MIB
/quotes/zigman/1482176/delayed 16,515 +742 4.70%
IBEX 35
/quotes/zigman/2759620/delayed 7,921 +175 2.25%
Stoxx 600
/quotes/zigman/2380150/delayed 312 +9 2.91%
Asia Dow
/quotes/zigman/6959860/realtime 2,385 -51 2.10%
Nikkei 225
/quotes/zigman/5986735/delayed 14,953 -761 4.84%
Hang Seng
/quotes/zigman/2622475/delayed 18,320 -226 1.22%
Shanghai
/quotes/zigman/1859015/delayed 2,763 -18 0.63%
Sensex
/quotes/zigman/1652085/delayed 22,986 +34 0.15%
Singapore
/quotes/zigman/1709939/delayed 2,540 +2 0.07%
Euro
/quotes/zigman/16008136/realtime/sampled 1.13 -0.01 0.61%
Yen
/quotes/zigman/16008150/realtime/sampled 113.25 +0.83 0.74%
Pound
/quotes/zigman/16008140/realtime/sampled 1.45 +0.00 0.18%
Australia$
/quotes/zigman/16008115/realtime/sampled 0.71 0.00 0.04%
DXY Index
/quotes/zigman/1652083/delayed 95.97 +0.36 0.38%
WSJ $ Idx
/quotes/zigman/41508961/realtime 88.99 +0.23 0.26%
U.S. 10yr
/quotes/zigman/15866666/realtime 1.75 0.00 0.00%
German 10y
/quotes/zigman/15866409/realtime 0.26 +0.07 37.97%
Italy 10yr
/quotes/zigman/15866497/realtime 1.64 -0.08 4.67%
Spain 10yr
/quotes/zigman/15866444/realtime 1.74 -0.04 2.01%
U.K. 10yr
/quotes/zigman/15866328/realtime 1.42 0.00 0.00%
Japan 10yr
/quotes/zigman/15866525/realtime 0.08 +0.06 442.45%
Crude Oil
/quotes/zigman/2260836/delayed 29 +3 10.72%
Gold
/quotes/zigman/33772884/delayed 1,239 -9 0.75%
Corn
/quotes/zigman/25518691/delayed 359 -1 0.35%
DJIA F
/quotes/zigman/48241424/delayed 15,925 +313 2.00%
S&P F
/quotes/zigman/43106711/delayed 1,860 +36 1.95%
Silver
/quotes/zigman/32655632/delayed 16 0 0.03%

Quotes

Symbol Price Change % Change
FB /quotes/zigman/9962609/composite 102.01 0.10 0.10%
AAPL /quotes/zigman/68270/composite 93.99 0.29 0.31%
GOOG /quotes/zigman/59527964/composite 682.40 -0.71 -0.10%
BAC /quotes/zigman/190927/composite 11.95 0.79 7.08%
C /quotes/zigman/5065548/composite 37.54 2.56 7.32%
F /quotes/zigman/264304/composite 11.55 0.38 3.40%
T /quotes/zigman/398198/composite 36.47 0.26 0.72%
BP /quotes/zigman/247026/composite 29.02 1.38 4.99%
GE /quotes/zigman/227468/composite 28.26 0.81 2.95%
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Rates »

5 yr CD
1.3%
2 yr CD
0.7%
1 yr CD
0.6%
MMA $10K+
0.2%
MMA $50K+
0.4%

National averages from Bankrate.com

You Don’t Need Another Credit Card, You Need A Better One.
Avg. APR Last Week 6 Months
Low Interest 11.96% 11.96% 11.62%
Business 13.12% 13.12% 12.85%
Student 13.42% 13.42% 13.14%
Balance Transfer 14.35% 14.35% 14.12%
Airline 15.17% 15.17% 15.10%
Cash Back 15.20% 15.26% 15.27%
Reward 15.25% 15.28% 15.14%
Instant Approval 18.02% 18.21% 18.00%
Bad Credit 22.56% 22.88% 22.73%
Source:CreditCards.com

SPONSORED SECTIONS

Trending Tickers
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  • /quotes/zigman/66208/composite JACK+3.34%
  • /quotes/zigman/17693969/composite FOSL+2.46%
  • /quotes/zigman/1497345/composite FXB+0.21%
X
Powered by StockTwits
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