How do I Cash Out my 401(k)?

The first step toward cashing out your 401 (k) account is to call the phone number that appears on your 401 (k) plan statement and ask them to send you the necessary paperwork you need to complete to cash out your plan. In some cases, you may be able to do that online or over the phone, but most of the time, you must fill out paperwork by hand.

How can I access my 401(k) without a penalty?

Another option for accessing your 401 (k) without incurring the 10% penalty is simply borrowing from it. Your 401 (k) plan may permit you to take out a 401 (k) loan and forgo the income taxes and penalty associated with an early withdrawal. While you’ll be required to repay the loan with interest within five years, you’ll be repaying yourself.

Can You cash out a 401(k) early?

Because your 401 (k) is a retirement fund and receives special tax privileges, the IRS imposes a 10% fee for cashing out early. This is meant to discourage you from using the money before you reach retirement age. In addition to the early withdrawal fee, there are taxes on cashing out a 401 (k) that you need to be aware of.