We Are to Help


Subscribe by Email

Your email:

Who We Are

Our Solutions

Not sure how to invest? Need advice? Fill out the form below, and we will personally contact you and review your investments with you.

How Fees Work

Contact Us

Would you like to be contacted by phone?

Key Investor Insight

Current Articles | RSS Feed RSS Feed

The Cost of Taking a Cash Distribution From Your 401k


Follow me on LinkedIn.


Deciding what to do with your 401(k) balance when you leave a job does not have to be difficult. It is something that almost everyone will have to do at some point. The best approach is to look at the various options, understand the differences, and figure out how your decision will impact your ability to save for retirement. In general, here are the options available:

  1. Keep your savings in your previous employer’s 401(k) plan (typically allowed if you have a balance of $5,000 or more)

  2. Transfer your savings to your new employer’s 401(k) plan

  3. Transfer your savings to a Rollover IRA, or take a cash distribution.

Let’s look at a hypothetical example of an individual with $20,000 in a 401(k) who has left his or her job. This person now has to choose between the options above. Let’s assume a hypothetical 8% annual return over a 20-year period. If the money was kept in a 401(k) plan or rolled into an IRA, it would have grown to $93,219 over 20 years. Alternatively, you could spend the $20,000 or put it into a taxable account, but these options do not provide the benefits of tax deferral. Furthermore, the tax consequences and early withdrawal penalties involved with the cash distribution would greatly reduce the actual amount of cash received. While cashing out from your retirement plan when you leave a job may seem like an attractive option, even the smallest withdrawal may have more sizeable financial consequences than you realize.

401k and IRA
Withdrawals from tax-deferred accounts will be taxed at then-current rates. Early withdrawals may be subject to surrender fees, and withdrawals made prior to age 59½ may be subject to a 10% IRS penalty tax. Past performance is no guarantee of future results. You should consult your tax advisor as to the tax consequences of a particular investment.

Follow me on LinkedIn.


Currently, there are no comments. Be the first to post one!
Post Comment
Website (optional)

Allowed tags: <a> link, <b> bold, <i> italics

Privacy Policy

We recognize that our relationship with current and prospective clients is based on integrity and trust. Respect for our clients' privacy is highly valued at Key Investment Team, and your privacy is important to us. We work hard to maintain your privacy and we are very careful to preserve the private nature of our relationship with you, and we understand that the trust you have placed in us is conditional upon our proper and secure handling of your personal information.

Information Key Investment Team Receives

Key Investment Team may collect non-public personal information about you from the following sources:

  • Information we receive from you or your authorized representative on applications and other forms, in interviews, or by other means; and
  • Information about your transactions with us, our affiliates, or others.

Information Key Investment Team Shares

We do not rent, sell, trade or otherwise release or disclose any personal or financial information about you. We do not provide client information to persons or organizations outside of Key Investment Team who are doing business on their own behalf, for marketing purposes or otherwise.

We may disclose all of the information we collect, as described above, to agents, brokers and representatives who service you, and to companies as necessary to effect, administer, or process a transaction, or for maintaining or servicing your account, and as otherwise permitted by law.

Otherwise, we do not disclose any non-public personal information about our clients or former clients to anyone, unless authorized by the client or as required by federal or state law.

Information Access and Security

We restrict access to non-public personal information about you to those employees at Key Investment Team who need to know that information to provide the products or services to you. We maintain physical, administrative and technical procedural safeguards that comply with federal standards to guard your non-public personal information.

We require anyone to whom we disclose your personal information to protect its confidentiality and to use it solely for the purpose for which it is disclosed. We enter into contractual agreements with non-affiliated third parties that prohibit the third parties from disclosing or using your non-public information other than to carry out the purposes for which we disclosed the information.

Changes to Our Privacy Policy

Key Investment Team reserves the right to modify or remove parts of this privacy statement at any time. We will notify you in advance of any changes that may affect your rights under this policy statement. Should you have any questions regarding our privacy procedures, please feel free to contact Cay Boychenko at (818) 205-1013.

Subscribe by Email

Your email: