Ask TaxMama ... Laid Off 401(k) Issue ... March 22, 2002

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Published by Eva Rosenberg, MBA, EA

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Laid Off 401(k) Issue

ť From: Starkville, MS

Dear TaxMama:

I was told that if you were laid off from a job and withdrew your money from your 401K you did not have to pay the 10% early withdrawl penalty, only the federal and state taxes on the money.

Don

Dear Don,

Did a tax professional tell you that?

I doubt it.

Exception number 06 does let you draw the money without penalty while you're unemployed. BUT, only if you used the money to pay for health insurance premiums.

Please, when it comes to your money, and tax issues, get your information from a qualified tax professional.

Good luck!

Best wishes

Eva Rosenberg
Your TaxMama

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