I contacted the company that manages my 401k. I was needing to make a withdrawal from because I have some bills I need to get out of the way. They told me I could only take out my money if I qualified for certain curcumstances. Ok is there another way I can withdrawal money. I mean this is money that belongs to me. And their not letting me have it.
Thank you for your help
Your question illustrates why I do not like 401(k)s. Assuming you do not meet those conditions, the short answer is quit your job. This is the only quick way to qualify to get control of your money.
However, assuming you are under age 59 1/2, you will not only pay tax on that distribution, you will also pay a penalty of at least 10 percent for a premature withdrawal.
Also, calling on your 'former employer' to send you your account will result in a 20 percent withholding. If that 20 percent is not replaced within 60 days in an Individual Retirement Account, you will be taxed and penalized on those funds as well, even though that 20 percent is going to the IRS.
Some companies permit non-hardship transfers of the employer contributions into self-directed IRAs for those under 59 1/2. For those over that age Federal law permits all funds to be so transferred, even while still employed with the sponsoring company. Whether your company allows this is disclosed in your Summary Plan Document.
If you can do this, you could take a withdrawal from the IRA. Of course the tax and penalty would still apply, but at least you could get at it.
Adam, I am not happy with my answer. But there is no happy answer I can give. I have begun a campaign to convince employers that 401(k)s are the wrong way to go. The only way to prevent your situation (which is quite common), is to replace them with non-qualified voluntary salary deduction plans. For those who are interested, I can be contacted at email@example.com or (888) 792-2379.
Willard R. Brumbaugh, LUTCF
CA License 0374776