“Time is money.”
Taking Money Out
Guess Ben knew the benefits of long-term investing. It’s through long-term investing that your 401(k) can grow to help provide for you in your retirement. But, there may be times when you need to take money from your 401(k) account. Before you do, it’s important to know the guidelines. Also, consider contacting an Ayco financial coach to discuss potential alternatives.
Loans
Ben never said “Neither a borrower nor a lender be” (it was Will Shakespeare!), and we know life happens. You can borrow money from your 401(k) account at any time and at any age without paying taxes or penalties while you are an active employee. However, you will miss out on any earnings you would have gained had the money been left in your account. You also need to know that you must pay the money back on any loan with interest and within the specified time.
Here are the loan qualifications:
- You must be a current eligible employee or partner and on active status.
- The minimum amount is $1,000.
- The maximum loan amount is $50,000 (less the highest outstanding balance in the last 12 months) or 50% of your account balance, whichever is less.
- There is a one-time fee of $75 on each new loan.
- The interest rate will be a reasonable rate based on current interest rates charged for similar loans by the banking industry.
- Two outstanding loans are allowed at a time.
- The maximum term is five years for a general loan and 10 years for a residential loan.
- Additional payments on existing loans are permitted. The additional payments must be in exact multiples of your regular loan payment and will be applied to both principal and interest.
- Participant loans may be repaid in full without penalty at any time. If you leave the firm and have an outstanding loan, you can continue to repay your account, if it remains with Latham.
Withdrawals While Working
The primary purpose of your 401(k) is to provide for you during retirement. However, there may be times when you consider taking money from your account while still working. Before withdrawing money, contact an Ayco coach or a CareContact representative to see if there are other alternatives.
If you decide to take a withdrawal while employed at Latham, it is important to know the guidelines.
You can withdraw:
- All or a portion of your voluntary after-tax contributions and rollover contributions, regardless of your age
- All or a portion of your partnership contributions and any related earnings, if you are at least age 55
- All or a portion of your pre-tax 401(k) salary deferrals and your Roth after-tax 401(k) deferrals, including any portion of the contributions that have been converted to Roth or an In-Plan Roth Conversion, and any related earnings, if you are at least age 59½
In-service distributions are subject to any applicable taxes and possible penalties. Latham may limit the number of withdrawals you may receive each year.
All withdrawals are subject to the rules established by Schwab, our plan trustee and recordkeeper. Contact Schwab for details regarding an in-service withdrawal.
Questions about other types of withdrawals?
See the Leaving Latham section for information about withdrawals at retirement, disability or death.
