How Long Will it Take If I Cash Out My 401K?

Food for thought.... I'd cash out and buy physical silver, gold, and platinum, but that's just me. Again look at the strength of gold today even in spite of the dollar gaining versus the euro. Gold and silver will probably go sideways for 1 more month, until an extension of stimulus is announced, then they will start their climb back up.

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How Long Will it Take If I Cash Out My 401K?

http://www.ehow.com/info_8343663_long-cash-out-401k.html

By Ciaran John, eHow Contributor updated May 03, 2011

When you cash out your 401k retirement account, your account custodian has to sell all of the securities held inside the account. Depending on how you arrange to have the funds disbursed, it can take several days before you actually receive your funds. Additionally, you may not receive the entire account balance due to the vesting schedule and taxation.

Selling Mutual Funds
Typically, 401k accounts contain mutual funds and the share price of a mutual fund depends on the value of the underlying stocks and bonds. Mutual fund shares are sold once daily after the stock market closes for the day. You must place your sell order before the market closes, which means you do not know how much your shares will sell for since the share price depends on the closing value of the stocks and bonds in the fund. Federal securities laws require buyers and traders of securities to transfer funds for purchase transactions within three business days. However, no rule exists that specifies how quickly a fund company must disburse funds that result from a sale although most companies do disburse your funds within a few days of the sale.

Vesting
Your employer's 401k plan has a vesting schedule that specifies when you assume control of matching 401k contributions made by your employer. Some 401k plans have rules in place that mean that your employer's contributions do not technically become yours until two or three years after the contribution date. If you sell your 401k before your employer's contributions are vested, then you only receive the money that you contributed to the account yourself and your account earnings.

Taxes
Contributions to 401k accounts are made on a pre-tax basis and when you make a withdrawal your employer has to withhold 20 percent of your disbursement to cover federal income tax. If you are below the age of 59 1/2 you also have to pay a 10 percent premature withdrawal penalty tax. Your employer does not automatically withhold this 10-percent penalty from your disbursement. Due to the 20-percent tax withholding, you do not receive the entire amount that you had in your account.

Method
Investment firms can use a variety of different means to disburse your 401k funds. Typically, when you cash in your 401k, the fund company mails out a check and it can take seven to 10 days for this check to arrive. Many firms give you the option of having your funds sent by a wire transfer. This usually costs between $10 and $30, but allows you to receive your money on the day after the sale occurs. Therefore, if your 401k custodian processes your sale quickly and wires you the money, you can take receipt of your money within two or three days of placing your trade.


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