how to opt out of the 401k ..?

darryl, Welcome to Brown Cafe.
I'm not slamming you but I just have to ask. Why would you drag up a thread that has been inactive for 6 months for your first post?
 

ups79

Well-Known Member
You can't, unless you leave the company or are 55 years of age. Well, in a way you could but taxes would be great even if you roll it into an ira.
 

tieguy

Banned
good haha im only down like 15% for the year....not too shabby compared to some

The lesson I learned on my first market downturn was to move the funds into the stable fund and bond markets when I see the market make a move in the wrong direction. That worked pretty well for me this time. I was a little slow to react last year did not make my move until september. Lost a couple of percent for the year. Up about 5 percent this year.

The other thing I do is play the seasonal cycles of ups stock during normal market conditions. You can generally catch a nice move upward from around late july to december with last year being the exception.

When ups stock dipped to the low 40's this year I moved a third of my portfolio into it. Thats proven to be a nice gain the past couple of months.

Its not fool proof by any means but understanding how the big money movers move thier funds and when can help you stabalize your 401K plan.

Also saw a nice piece by Scott Davis at our yearly reportback on identifying the point when the market is turning back up. Three factors.

Item one - Credit market becomes fluid. Not there yet. You can see Obama is still trying to light that fire with some more legislation that will kick in soon.

Item two - The real estate market turns around. That may be starting to happen as we have had two positive months.

Item three - unemployment - job losses stabalize. Not sure if we are there yet. I imagine the recent closing of car dealerships by GM will trigger another increase in the unemployment rate.

JMHO for what its worth.:happy-very:

 
You can close out your 401K anytime you want to, but it is foolish to do so. There are early withdrawal penalties plus you have to declare the total amount as income and pay taxes on the whole amount. Your talking a large difference in income tax bracket.
 

1989

Well-Known Member
Max your IRA first (unless you get some kind of 401K match) You have complete control and more options and flexibility. Of course it takes discipline to fund it yourself. Much easier to have the money taken out of your wages. Although you can make automatic deposits from your banking account.
 

ups79

Well-Known Member
Helen, I believe you are right. You cannot start receiving payments until you reach 59 1/2 and you must start taking payments when you reach 70 1/2.

no extra tax penalty if taken out at 55(the 10 percent penalty is waived), however you will be paying taxes depending upon you tax rate on all funds recieved and not rolled over into an ira.
 

Catatonic

Nine Lives
no extra tax penalty if taken out at 55 (the 10 percent penalty is waived), however you will be paying taxes depending upon you tax rate on all funds recieved and not rolled over into an ira.

You are correct:
If you're age 55 or older and you permanently leave your job, then you can begin tapping it immediately without owing the 10% penalty. This is called the "separated from service" exception. It doesn't matter if you quit, retire or are fired. In fact, you could even begin working someplace else. But remember: Even when the 10% penalty doesn't apply, you'll still owe income taxes on your withdrawals.
 
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