San Francisco, CA asked in Consumer Law and Tax Law for Minnesota

Q: Can I withdraw from my 401k or must I take a loan?

I am 100% owner of my 1120-S corporation and am 71 years of age. My 401K is company sponsored.

Related Topics:
1 Lawyer Answer
Eric  Day
Eric Day
  • Tax Law Lawyer
  • Henderson, NV

A: You can withdraw from your 401k anytime, in fact, you should have an amount that is required to be distributed from the plan once you have reached 70 1/2. The distribution will be taxable to you upon distribution, but once you’re of age it will not be a early distribution and therefore won’t be penalized. If you were trying to take money from the plan that is not taxable, it would have to be from a loan or Roth. You are allowed to lend up to 50% of the vested balance of the funds or $50,000, whichever is less. Just make sure the loan goes to you the participant and not the entity. If it goes to the entity sponsoring the plan, this will be a prohibited transaction.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.