401k cashout.. taxed as income tax? (refund, IRA, company, taxes)

[Smooth23]

I've got a small 401k from a previous job with about $3800 in it. If I cashed it out I would pay $1149 in taxes, roughly. I've been on unemployment all year, and I'm wondering if I cashed it out, would I get that back as a refund on my taxes?.. Seeing as I haven't made much this year, I should be getting almost all my taxes back. I'm a college student trying to make it through, finanically. Having a tough time now that unemployments kaput.

[HappyTexan]

Don't forget you also pay a penalty besides the taxes.

But, if you need the cash to make it through, I say do it as last resort.

[Smooth23]

Originally Posted by HappyTexan

Don't forget you also pay a penalty besides the taxes.

But, if you need the cash to make it through, I say do it as last resort.

Yeah, penalty is 10%, so less than $400.. not toooo bad.

[lumbollo]

I think there is a provision where you can avoid the penalty if there is a hardship. Not sure if it is still there or not, but it's worth checking into. You might have to roll it into an IRA first but you should do this anyway and not leave it in the company plan.

[Smooth23]

Originally Posted by lumbollo

I think there is a provision where you can avoid the penalty if there is a hardship. Not sure if it is still there or not, but it's worth checking into. You might have to roll it into an IRA first but you should do this anyway and not leave it in the company plan.

The provision declares you pretty much have to be on the edge of living in a cardboard box to qualify.

[hindsight2020]

Which is why said individual should have had that money in a regular savings account and not in a retirement account. politically incorrect as it sounds, he/she cannot afford to set aside retirement income. Welcome to the club.

[Smooth23]

Originally Posted by hindsight2020

Which is why said individual should have had that money in a regular savings account and not in a retirement account. politically incorrect as it sounds, he/she cannot afford to set aside retirement income. Welcome to the club.

When I lost my job I had 15k in savings.. Now I'm just trying to stay afloat while I get through college.