How do I access 401k without paying the penalty?

#1

Hello all!

I, for personal/ethical reasons, cannot invest in my companies Roth 401k. I do not have options for index funds or stocks that I can invest in. With that said, I expect to be 100% vested soon. So I want to take advantage of the company matching. I prefer to not pay the penalty, but I plan to pay the penalty.

With that said, how can I access the company matching without compromising the income? Is there a method to transfer these funds into a different type of retirement account or is there some way to go about this that I am not aware of? Any secret loop holes?

I am basically trying to maximize my 401k without paying taxes or the penalty or paying the lowest amount possible to transfer into a self managed account.

Thanks!

#2

Are you planning on terminating employment with your employer? If not, I don’t think you can transfer your whole 401k balance out of the company’s designated account. If you’re terminating employment, you can request a direct Rollover from Roth 401k to Roth IRA, you can request company match (or any taxable balance) to be rolled over to a traditional IRA to avoid taxes now. If you plan on taking the 401k balance and deposit it into a non-IRA account, you will be taxed and penalized (if you don’t meet qualifying requirements).

And honestly, I’m confused by your question and what you’re trying to do.

#3

You can transfer or roll over your 401(k) funds to a self-directed IRA if you separate from your employer due to retirement, termination, or simply quitting your job. You can transfer the funds just like you would to another 401(k) or a traditional IRA.

Does that answer your question?

#4

Hi, what if I am still with my employer? That is what I am trying to figure out. Thanks!

#5

My company Roth 401k does not give me the freedom to choose my investments. I have ethical limitations on what I can and cannot invest in. Currently, I do not put anything in the 401k because of this issue. How can I work around it so I can maximize my salary without compromising the matching. I will pay the penalty if it’s the only way that I can take the company matching.

#6

Bottom line is, if you don’t contribute to your 401k, you will not get company match. You’re losing out on free money. There’s no way to get company match if you don’t contribute to 401k. You’re also losing out on tax advantages of 401k and Roth 401k by not contributing.

At the end of the day, you have to weight your ethical beliefs against your money beliefs. Does your ethical beliefs outweigh thousands of dollars of free money and tax savings evey year?

I imagine your 401k provides index funds or mutual funds investment choices - I highly recommend taking advantage of your 401k.