How to Cashout My 401(k)

Your employer's human resources department will assist you in cashing out your 401(k).

Cashing out a 401(k) early comes with penalties. There are always other options available, such as rolling over your 401(k) funds to an Individual Retirement Account (IRA), or leaving your 401(k) with your former employer. However, if you've decided that cashing out your 401(k) is your only option, the process is relatively straight-forward.

Instructions

1. Speak to your employer's human resources department. Let the person in charge of your employer's 401(k) program know you wish to cash out your 401(k). You will receive documents detailing how much money is in your 401(k) and specific forms for cashing it out.

2. Fill out the forms you received from human resources. Make sure you include how you would like to receive your 401(k) funds and that you want to cash out the entire 401(k), not just a portion of it.

3. List how you would like to receive your 401(k) funds. If you want to receive your funds by check, make sure your human resources department has your correct mailing address or forwarding address. This is particularly important if you've recently moved or if you're planning to move out of state.

4. Read any and all information sent by your employer once you receive your check. Typically, employers include a breakdown of penalties and taxes along with the check. If you have questions, or if you think the check amount is incorrect, contact your employer's human resources department for an explanation.

Tips & Warnings

• You are required to report the funds you receive from your 401(k) when you file your taxes, as 401(k) funds are considered income.

References

• Bankrate.com; Cash out, Roll Over or Leave 401(k) Behind; Sonya Stinson; March 2010
• Stocks-Simplified.com: Cash Out 401k
• Cash Out 401k; Cash Out 401k; 2009