To withdraw funds from your Nationwide 401(k), you can either initiate the withdrawal process through your online account or contact Nationwide’s customer service department. If you choose to withdraw online, log in to your account, select the “Withdraw” option, and follow the prompts. You will need to specify the amount you wish to withdraw and the withdrawal method, such as direct deposit or check. If you prefer to withdraw by phone, call Nationwide’s customer service line and provide the necessary information, including your account number and the amount you wish to withdraw. You will also need to specify the withdrawal method and provide any additional information requested by the customer service representative.
Types of Withdrawals from a Nationwide 401(k)
There are several types of withdrawals you can take from your Nationwide 401(k) account. Each type of withdrawal has its own set of rules and tax treatment, so it’s important to consider your options carefully before you request a withdrawal.
Age-based withdrawals
- Age 59½ and older: You can take withdrawals from your 401(k) account without paying a 10% early withdrawal fee once you reach age 59½.
- Under age 59½: If you take a withdrawal from your 401(k) account before you reach age 59½, you will typically have to pay a 10% early withdrawal fee in addition to any applicable taxes.
Non-age-based withdrawals
- Hardship withdrawals: You may be able to take a hardship withdrawal from your 401(k) account to cover certain essential, non-elective, and verifiable financial needs, such as medical or education.
- Qualified domestic relations orders (QDROs): A QDRO is a court order that requires your spouse or former spouse to take a distribution from your 401(k) account as part of a property division.
- Substantially equal payments (SEPS): SEP withdrawals are similar to traditional IRAs in that they require you to take equal payments from your 401(k) account over your life, starting no later than the month after you reach age 72.
- Roth conversions: Roth conversions allow you to convert some or all of your traditional 401(k) funds to a Roth 401(k), which can grow tax-free and eventually be withdrawn tax-free.
Table of Tax Withholding on Withdrawals
| Type of Withdrawal | Federal Tax Withholding |
|---|---|
| Age-based withdrawals (over 59.5) | 10% |
| Age-based withdrawals (under 59.5) | 10% plus any applicable taxes |
| Hardship withdrawals | 10% plus any applicable taxes |
| QDROs | Federal income tax withholding may be required |
| Substantially equal payments (SEPS) | 10% |
| Roth conversions | No tax withholding |
It’s important to note that this information is for general informational purposes only and should not be construed as tax advice. Please consult with a tax advisor to discuss the specific tax treatment of your withdrawals.
Tax Implications of Nationwide 401(k) Withdrawals
While withdrawing from a 401(k) may be necessary in certain situations, it’s crucial to understand the tax implications to avoid unplanned expenses or penalties.
Before Age 59.5
- 10% Early Withdrawal Penalty:
- Income Tax:
A penalty of 10% is imposed on any withdrawals made before reaching age 59.5, in addition to the regular income tax on the amount withdrawn.
Withdrawals are taxed as ordinary income, and the amount withdrawn is added to your taxable income for the year.
After Age 59.5
- No Early Withdrawal Penalty:
- Income Tax:
Once you reach age 59.5, you can withdraw funds without incurring the 10% penalty.
Withdrawals are still taxed as ordinary income, but the penalty is no longer a factor.
Exceptions to Early Withdrawal Penalty
- Substantially Equal Periodic Payments:
- Disability:
- Education:
- First-Time Home Purchase:
- Unforeseen Medical Expenses:
- Birth or Adoption:
- Qualified Reservist Distributions:
- Financial Hardship:
Withdrawals made in the form of substantially equal periodic payments (SEPPs) are not subject to the penalty.
Withdrawals due to a disability may be penalty-free.
Withdrawals for qualified education expenses may be penalty-free.
Up to $10,000 can be withdrawn penalty-free for a first-time home purchase.
Withdrawals for medical expenses above 7.5% of your adjusted gross income may be penalty-free.
Up to $5,000 can be withdrawn penalty-free for expenses related to adoption or the birth of a child.
Withdrawals by qualified members of the military reserves may be penalty-free.
Withdrawals may be allowed penalty-free if you can prove financial hardship.
Rollover or Transfer Options for Nationwide 401(k) Withdrawals
When you leave your job or retire, you have several options for withdrawing funds from your Nationwide 401(k) plan. Rolling over or transferring the money to another retirement account can help you avoid penalties and taxes. Here are some common options:
Direct Rollover
- Transfer funds directly from your Nationwide 401(k) to another eligible retirement account, such as an IRA or 401(k) plan with a new employer.
- This option avoids any tax implications on the transferred funds.
- The funds remain in a tax-deferred status until you withdraw them during retirement.
Indirect Rollover
- Withdraw the funds from your Nationwide 401(k) and deposit them into a new retirement account within 60 days.
- Any funds not deposited within the 60-day period are subject to income and potential early withdrawal taxes.
- If you are under age 59½, you may also owe a 10% early withdrawal penalty.
Transfer to New Employer’s 401(k)
- If your new employer offers a 401(k) plan, you can transfer the funds from your Nationwide 401(k) directly into it.
- This option allows you to consolidate your retirement savings and benefit from any matching contributions offered by your new employer.
- The funds remain tax-deferred until you withdraw them during retirement.
Table: Summary of Rollover and Transfer Options
| Option | Tax Implications | Eligibility |
|---|---|---|
| Direct Rollover | No tax implications | Any eligible retirement account |
| Indirect Rollover | Income and potential early withdrawal taxes if not deposited within 60 days | Any eligible retirement account |
| Transfer to New Employer’s 401(k) | No tax implications | Only if your new employer offers a 401(k) plan |
Early Withdrawal Penalties for Nationwide 401(k) Withdrawals
If you withdraw money from your Nationwide 401(k) account before reaching age 59½, you may be subject to a 10% early withdrawal penalty, as well as income tax on the amount withdrawn.
- 10% early withdrawal penalty: This penalty is applied to the amount of money you withdraw from your 401(k) account before age 59½.
- Income tax: The amount you withdraw from your 401(k) account is also subject to income tax. The amount of tax you owe will depend on your income and filing status.
There are a few exceptions to the early withdrawal penalty, including:
- Birth or adoption of a child: You can withdraw up to $5,000 from your 401(k) account to cover the costs of childbirth or adoption.
- Disability: You can withdraw money from your 401(k) account if you are disabled.
- Death: You can withdraw money from your 401(k) account if the account owner has died.
| Age | Early Withdrawal Penalty | Income Tax |
|---|---|---|
| Under 59½ | 10% | Yes |
| 59½ or older | 0% | Yes |
Well, there you have it, folks! With these easy steps, you can smoothly withdraw from your Nationwide 401k. Remember, knowledge is power, and now that you’re armed with this info, you can make informed decisions about your financial future. Thanks for hanging out and giving this article a read. If you’ve got any more money-related questions, don’t be a stranger. Come back and visit us, and we’ll be happy to help you navigate the financial jungle. Until next time, keep your wallets happy and your dreams within reach!