I still work at this company!
You need to check your plan highlights or your summary plan description, but one or more of the following three options may be available to you in order to access the money in your retirement plan while you are still an employee at that company.
Loans
You can borrow against the money you have put into your retirement plan – up to 50% of your vested account balance, limited to $50,000. You select the term to pay back the loan – usually you can have up to 5 years to pay it back. In the event that you are taking the loan to purchase your primary residence, you may be able to select a term of up to 30 years for the repayment. The interest rate is often 1% or 2% above prime. At the time of this publication, prime (http://www.fedprimerate.com/) is 5.25%, so the interest rate is 6.5%. You are paying the interest back to yourself. Typically the payments come directly through payroll, and are separate from your regular contribution to the plan. There is usually not a penalty for paying it off early. You do not pay any taxes or penalties on a loan, unless you default on your repayments. There is a processing fee.
Hardships
Hardship withdrawals are predicated on you meeting a certain criteria for financial hardship. That criteria is usually one or more of the following: prevention of eviction or foreclosure; purchase of primary residence; excessive medical bills not covered by insurance; funeral expenses; repairs due to catastrophic damage to your primary residence, secondary education expenses for yourself or immediate family. Student loan payments do not qualify. Tax bills or car repair bills do not qualify. You will have to show proof of a hardship, such as an eviction letter or a current school tuition bill. You will pay all applicable federal and state income taxes on the funds you withdraw, as well as a 10% penalty if you are below age 59.5. The federal taxes (at a rate of 20%) is withheld at the time of you doing the withdrawal. Some US states (Arkansas, Delaware, DC, Iowa, Kansas, Maine, Maryland, Massachusetts, Nebraska, North Caroline, Oklahoma, Vermont and Virginia) require you pay estimated state income taxes at the time of withdrawal as well, and while the others give you the option to either pay estimated state income taxes at the time of withdrawal, or defer paying those taxes until when you file your tax return for that tax year. There is a processing fee.
In-service withdrawals at a certain age
Some plans allow participants above a certain age (usually 59.5 years old) to make withdrawals on their retirement plan. In-service withdrawals can be in cash or a rollover to another plan. You will pay all applicable federal and state income taxes on the funds you withdraw as cash, as well as a 10% penalty if you are below age 59.5. The federal taxes (at a rate of 20%) is withheld at the time of you doing the withdrawal. Some US states (Arkansas, Delaware, DC, Iowa, Kansas, Maine, Maryland, Massachusetts, Nebraska, North Caroline, Oklahoma, Vermont and Virginia) require you pay estimated state income taxes at the time of withdrawal as well, and while the others give you the option to either pay estimated state income taxes at the time of withdrawal, or defer paying those taxes until when you file your tax return for that tax year. There is a processing fee for each distribution made.
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