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Accounting, Payroll & Pension Issues/early pension withdrawl for business purchase
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Question
A friend of mine recently told me that he plans on quitting his job, tapping into his pension and 401K to purchase a business and that any tax penalty he would have to pay is deferred. Is this accurate?
If he isn't 59 1/2, there will be a 10% penalty and the proceeds will be taxed as ordinary income.
To my knowledge there are no exceptions for creating a business. First home purchase and medical emergencies are the exceptions.
Where did he get this advice?
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Answers by Expert:
Ed McFarland
Expertise
Over 20 years of experience as a CFO, Controller and now Consultant to small businesses. Dealt with 401k, 403b, deferred comp plans, key man issues, disablity, business continuation plans, HSA plans and other benefit issues.
Experience
Management experience in Financial Services, Manufacturing, Media, Logistics. Taught graduate and undergraduate business courses.
Education/Credentials
MBA
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