I was recently laid off due to lack of work. I almost immediately received a letter from Principal Financial Group telling me my vested account balance was below the minimum amount allowed for my 401k and that I had two options. I could either roll it over to an IRA in Principal Bank, or take a cash disbursement.
Are these my only options? If I did do a cash disbursement, I know they take 40% for taxes, but can they take 10% for early withdrawal when the situation isn't my fault and Principal is making the options? They state it will automatically be rolled to the IRA on May 1st.
The options available are a function of the 401(k) plan itself. It's likely that, if those are the options presented, those are all the options available to you. The communication from the current 401(k) plan custodian should also include a full description of the penalties and taxes you'd have to pay if you take your funds out.
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The options available are a function of the 401(k) plan itself. It's likely that, if those are the options presented, those are all the options available to you. The communication from the current 401(k) plan custodian should also include a full description of the penalties and taxes you'd have to pay if you take your funds out.