401K ?

[maface]

My friend got laid off and with her current 401k she can only take out all or nothing is there something she can roll it over into and take out a partial amount?

Thanks all

[daveleau]

She can roll it into an IRA for free and then withdraw from the IRA. She will be penalized and taxed on what she withdraws.

[M_Six]

The penalties and taxes on early withdrawal from 401Ks can be pretty severe. Tell her to think long and hard before doing that. She'd be better off rolling it over into an IRA.

[maface]

She probably will go the IRA route thanks

[ablang]

Yeah, I would probably just open up a new ROTH IRA account at her credit union and just roll over into it. That is, if it can be done. Retirement money should not be used for anything but. It should be given time (lots) to grow.

[daveleau]

If you roll it into a ROTH, you have to pay the taxes up front. If she is tight on funds, this might not be possible now. If she rolled it into a regular IRA, then there would be no taxes up front and she could roll it into the ROTH later.

maface:
A ROTH is a better tax shelter because you pay taxes at the beginning, when the sum is small. When you withdraw the money at the end, there is no tax. A regular IRA has no taxes up front, but you pay taxes ont he much larger sum of money at the end. So, you gain a lot when rolling into a ROTH IRA. The ROTH has a $3000 limit right now, but it goes up to $5000 in 2004 or 2005.