AboutJohn D Smith, CFP Expertise I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related financial planning/investment issues. I have a B.S. degree in Financial Planning & Counseling. I am also a Certified Financial Planner (CFP) and have performed fee only investment management and financial planning services for the past 11 years.
Question my husband had a 401K with former employer that has just been sitting there. Scudder has informed us that they are closing the 401K's. If we take the money, will we still have to pay 10% early withdrawal + taxes? It is only around $7,000. Thank you so mucy
Answer Hi. If your husband is younger than age 59 1/2, then yes, you will be faced with a 10% early withdrawal penalty in addition to having to pay taxes. The best thing to do in order to avoid both if for your husband to open an IRA Rollover at a mutual fund company or a brokerage firm such as Charles Schwab. He can then take the 401k and perform a direct rollover into the new IRA, reinvest it, and not be subject to taxes or penalties. I hope this helps.
