Article provided by: DMB Soto Insurance Services
In case you leave your job before retirement, it might not be clear how to access your retirement savings account. You may not also have the answer to the question, “ how long does it take to get 401k after quitting your job?” At The Financial Architects, we will guide you on these and other matters regarding life insurance protection.
How Will You Have to Wait to Get 401(k) After Quitting Your Job?
How long you wait depends on your previous employer. It also depends on the method you choose to access your balance. To know the average waiting period, you can consult the summary plan description provided by the company. Using the plan description, you’ll find the provisions available for payouts.
Other than that, it’s important to note that the valuation process might affect the waiting period. The process involves the company assessing your balance. Some employers do it yearly, while others do it more frequently, either quarterly, monthly, or daily. This is a necessary process before any balances are paid out. As a result, the duration between when you make a payout request and when valuation occurs indicates the period it might take to get your funds.
Liquidation is another factor that affects 401(k) payouts. By making contributions, you invest in your retirement savings. To withdraw your funds, these investments have to be converted back to cash. This takes varying lengths of time, depending on where the money was invested.
What Can You Do with Your 401(k) After Quitting?
You can decide to do several things with your 401(k) once you quit your current job. Some of the options are:
- Leave It with Your Past Employer
If your account balance is $5,000 or more, your plan may allow you to leave it with your former employer. This will ensure that you continue benefiting from the current investment options.
- Rolling It into a New 401(k) Account
You can carry over the balance from your current account to a new one with a new company. But that can only be done once you have activated the new account.
- Cashing Out
Withdrawing your balance is another option. However, by cashing out, you may be charged a 10% tax penalty if you’re below 55 years. Also, you'll have to pay income tax on the entire amount.
- Rolling Your 401(k) Into an IRA
You may also roll over your 401(k) balance into an Individual Retirement Account (IRA), where you can continue investing the funds.
How to Access Your 401(k)
You have to make a payout request with your former employer to begin the process of receiving your balance. Usually, you’ll be provided with forms to fill. On the forms, you should indicate that you want to withdraw your 401(k) as a result of quitting your job. In addition, you’ll be required to state where you want the money to be sent to.
Make Wise Savings Decisions
The Financial Architects can give you the best answer to, " how long does it take to get 401k after quitting a job." Give us a call today on (888) 350-5396 for any questions or queries.
View Larger Map