The attached picture is from the employers retirement handbook. Only thing is, I thought you couldn't touch retirement accounts? The amount I invested was not over $1000. My employer also has not contacted me or sent a check. I want to make sure I'm understanding this correctly before I inquire. Thanks!
Annie: If you are under age 59.5 they will withhold 20% towards federal income tax and send a check for $720. If you want to roll the $900 into an IRA (which must be within 60 days) you would need to add the $180 from another source. Whatever you do not roll into another retirement plan will be subject to income tax, plus 10% penalty if under age 59.5. So if you only roll the $720 into an IRA, the $180 withholding would be subject to tax and penalty (which would come out of the withholding). If you don't roll anything over, the $180 withholding is unlikely to cover the tax and penalty unless you are low income.
You can take out the money, and it probably is a good thing to do, but rather than taking it in cash (which, if you're under age 59 1/2 will cause you to have to pay taxes and a heavy penalty), you'll want to immediately roll it over to an IRA. Doing so avoids any taxes and penalties, while keeping it working for your eventual retirement.
You might able abe to just eave it in. You can roll it into an IRA, your best option, or you can take it out in which case you'll pay income tax on it for the year of withdrawal, PLUS a 10% penalty
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