Taking a 401k rollover withdrawal might be a possibility for you if you need money from your 401k plan.
Of course, the only way you can take this kind of withdrawal is if you have ever rolled money into your 401k from a prior plan or IRA, hence the name rollover withdrawal.
As always, taking money from your 401k plan should be the last thing on your mind, but life does happen, and sometimes we need money that we just don’t have. So tapping our 401k might possibly be our only option.
If this is you, tread lightly. Your plan will likely allow a withdrawal of assets that you rolled into it from elsewhere (check to be sure), but it still has strings attached. If you are under age 59 ½ you will pay a 10% early withdrawal penalty on the distribution.
If you really need the money, you might want to take a look into the possibility of a 401k loan instead. A loan does not come without its own set of consequences, but at least you are paying it back into the account instead of taking a withdrawal. Plus you won’t pay any penalties unless you don’t pay the loan back.
Looking ahead, if you are ever in a position where you leave your employer and you are wishing to roll your assets over from your old 401k plan, do yourself a favor and resist rolling it into your current employer’s 401k plan. Generally speaking, you are much better off rolling it into an IRA of your choosing. You will have much more flexibility there, and in certain cases you may be able to avoid the 10% early withdrawal penalty on distributions.