Expert: Ed McFarland - 11/3/2006

Question
Hi,
I have a 401k value 41,273.78 as of 12/31/05. I resigned as of November 1,2006. I am 100% vested, will I receive this directly upon my termination.  I am taking it in cash since I am a single parent without a job. The earnings from 12/05-12/06 will be paid not until February and I have a safe harbor.  What does this all mean and I need this cash distribution so I don't loose my house.

Answer
First realize that unless you are 55 or older you will give away over $12,000 in taxes and penalties. This should only be very last step to take the money.

As ugly as it may sound, selling the house and moving into something you can manage might be more practical.

You should something called the plan document, it explains how your plan works. From what you are saying is that the plan makes distributions every quarter and you'll get your balance 30 days after the end of the quarter.

A Safe Harbor plan is a type of Defined Contribution plan, that the plan sponsor does certain things, they can avoid an array of costs.

More information is available at the the Department of Labor site, www.dol.gov

Good luck