Retirement Planning/cash out 401k


I work security for gated community. The company that developed the gated community turned it over to the homeowners association. I now work for the homeowner association. the homeowners association kept the same employer services that the company had and where I have a 401k plan.They signed a contract with them.  The homeowner association has offered there own 401k plan which I have decided not to take part in and they are using the same employer services. Question: Can I cash out my original 401k?

The Financial QB
The Financial QB  
Thanks for your question. I hope this can help.

The easy answer to your question is "YES", its your money and you can do whatever you want with it. (You might not be completely vested in some of your employers contributions but other than that the rest is yours).

However, the real concern here is not whether you could but rather what would be your reason for "cashing out" your 401k and not participating in your current employers plan.

"Cashing out" on your plan will cause not only for you to have to pay the tax on that amount in the year in which the distribution was made but also pay an additional 10% penalty tax if under age 59 1/2. In addition, the odds are most folks will spend it which will cause you to not have that money in the future when you will be retired.

In addition, I would highly recommend that you contribute to your current employers 401k plan as much as you can. Retirement is now under your control and its easy mathematics. You save early and often you will have money in the future. You don't save early and often and you will not have money.

It is never a wasted effort to take some time to go over your personal situation with a Certified Financial Planner and review your options. Hope this helps.  

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Richard E. Reyes, CFP


I can provide answers to questions relating to retirement especially relating to; income distribution, tax efficiency, long-term care insurance, life insurance, estate planning, asset protection, variable and fixed annuities, alternative investments and prudent portfolio design.


Through the years Richard has built a reputation as one of Central Florida's expert on retirement income distribution by providing sound, unbiased wealth coaching. We believe that Financial Planning is the problem and Wealth Coaching is the solution. The Wealth Coaching process gives you Peace of Mind, so you can stop worrying about your future. It helps you find happiness as it guides you in the TRUTH of investing, by teaching you how to make wise choices as you journey through your life’s stages. It is all about your relationships and what you value, not your net worth.

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