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shelliemacs

401 k withdrawl conflict w/ss

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My mom is 62 an before she was dx. in feb she had applied for early retirement. She was told she could earn up to 11,500 year without effectint her SS benefits. My question is this...she wants to take out her 401 K to pay off her credit card bills in case her condition worsens and the check she gets from that will be over the 11,500 alloted by SS.

Her 401K will be having federal taxes held out of it but how does withdrawl of her 401 K effect her SS. What fines or penalties will she be facing?

does anyone know??

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Looks like no fines or penalties. Just the federal tax, since she is over 55.

Can I withdraw funds from my 401(k) if I retire before I reach age 59½, say at age 55?

The truth is, you can withdraw funds from your 401(k) anytime you leave a company no matter what your age. You will, however, owe withholding and, if you are younger than age 55, a 10% withdrawal penalty. If you are age 55, leave the company, and take a lump sum distribution, you will pay no penalty, only the income tax. The tax code says that no penalty applies to distributions "made to an employee after separation from service after attainment of age 55."

Check into 5-year averaging to reduce taxes, unless she needs more money

Take care

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