Can I take all my 401k when I reach 70 1/2 less the 20% IRS amt? Do I have to wait or can I take my money at the exact time I reach that age?
by 
stainer37
ANSWERS: 2
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When you are 70 1/2 you must take the required distribution out of your account or you will owe a penalty. You may take all of your money out, you will just have to pay taxes on it.
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If you have retired and left your money in your company's 401k, then you are subject not only to 401k regs, but also your particular company's plan provisions. Better to roll the 401k to an IRA. It must be rolled directly to the IRA custodian. If not, the company is required to withhold 20%. Once you have rolled it to an IRA, you can take all the money anytime you want to. If you take it prior to 59 1/2 then you pay normal income tax plus 10%. There are ways around this, however. After 59 1/2 you can take all the money and pay only the normal income tax on it, which may very well be more than 20%. If you have money in your IRA (formerly the 401k) at any time during the year in which you turn 70 1/2 (even one day), then you owe a required minimum distribution (RMD), which will be about 4% of the account's value at 70 1/2. If you fail to withdraw the RMD, the penalty is 50% of the amount you should have withdrawn...very steep. If you are in your 60s, and even early 70s, you should seriously consider converting the IRA to a ROTH IRA.
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