How to Pull Money Out of Your Voya 401(k): A Comprehensive Step-by-Step Guide
Are you facing an unexpected financial crunch or contemplating a major life change that requires accessing funds from your Voya 401(k)? It's a significant decision, and understanding the process, rules, and potential consequences is absolutely crucial before you make any moves. While your 401(k) is designed for retirement, there are specific circumstances under which you can withdraw funds.
Before we dive in, ask yourself this: Is this truly the only option? Withdrawing from your 401(k) prematurely can have a substantial impact on your long-term financial security. Consider alternatives like creating a strict budget, exploring personal loans, or even a 401(k) loan (if your plan allows it and you're still employed) before committing to a withdrawal. Remember, a 401(k) withdrawal permanently removes money from your retirement savings, whereas a loan allows you to pay it back to yourself.
If you've weighed your options and determined that pulling money from your Voya 401(k) is necessary, this detailed guide will walk you through the process step-by-step.
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| How To Pull Money Out Of 401k Voya |
Step 1: Understand Your Withdrawal Options and Eligibility
This is the most critical initial step. Not all withdrawals are created equal, and your eligibility depends heavily on your current employment status, age, and the specific rules of your employer's 401(k) plan with Voya.
Sub-heading: Types of 401(k) Withdrawals
Voya, like most 401(k) administrators, offers various withdrawal types, each with its own criteria:
Age-Based Withdrawals (59½ or Older): If you are 59½ years old or older, you typically have the most flexibility. You can generally withdraw funds for any reason without incurring the IRS 10% early withdrawal penalty. However, withdrawals are still subject to ordinary income taxes. Some plans may allow you to take these withdrawals as often as twice a year.
Hardship Withdrawals: These are designed for situations of "immediate and heavy financial need." The IRS defines specific circumstances that qualify:
Unreimbursed medical expenses for you, your spouse, dependents, or primary beneficiary.
Costs directly related to the purchase of a principal residence (excluding mortgage payments).
Payments necessary to prevent eviction from or foreclosure on your principal residence.
Burial or funeral expenses for a deceased parent, spouse, child, or dependent.
Expenses for the repair of damage to your principal residence that would qualify as a deductible casualty expense under federal income tax rules.
Qualified post-secondary education expenses for you, your spouse, dependents, or primary beneficiary.
Important Note: Before taking a hardship withdrawal, your plan may require you to take any available loans from all plans maintained by your employer. The amount you can withdraw is generally limited to the amount necessary to satisfy the financial need, though you can gross up the withdrawal to cover taxes and penalties. You will need to provide supporting documentation for hardship withdrawals.
Withdrawals Upon Termination of Employment: If you leave your job, you gain access to your 401(k) funds. You typically have several options:
Leave the money in the plan: If your balance is above a certain threshold (e.g., $5,000), you can often keep your funds with Voya.
Roll over the balance: You can transfer the funds to another qualified retirement plan (like a new employer's 401(k)) or an Individual Retirement Account (IRA). This is often the most recommended option as it avoids immediate taxes and penalties and keeps your retirement savings growing.
Take a lump sum distribution (cash out): This means you receive the money directly. Be prepared for significant tax implications, including ordinary income tax and potentially the 10% early withdrawal penalty if you're under 59½.
Long-Term Disability Distributions: Some plans allow a 100% distribution of your account balance (excluding brokerage money) if you are on long-term disability. Partial withdrawals typically aren't allowed in this scenario.
Sub-heading: Check Your Specific Plan Document
While these are general guidelines, the specific rules of your employer's 401(k) plan with Voya govern your options. Your plan document will detail what types of withdrawals are permitted and under what conditions. You can usually access this document through your Voya online account or by contacting Voya customer service.
Step 2: Gather Necessary Information and Documentation
Once you've identified the type of withdrawal you need, it's time to prepare. Having all your information ready will significantly speed up the process.
Tip: Don’t skip — flow matters.
Sub-heading: Key Information You'll Need
Your Voya Account Information: This includes your account number, Social Security Number (SSN), and any PINs or login credentials.
Withdrawal Amount: Determine the exact amount you wish to withdraw. For hardship withdrawals, this should align with your documented financial need.
Reason for Withdrawal: Be prepared to clearly state the reason for your withdrawal. For hardship withdrawals, this is particularly important and must fit within the IRS-defined categories.
Banking Information for Direct Deposit: If you want direct deposit, you'll need your bank's routing number and your checking or savings account number. Note: Voya may require your banking information to be on file for a certain number of days (e.g., 7 days) before releasing funds via Electronic Funds Transfer (EFT).
Tax Withholding Preferences: You'll need to decide how much federal (and potentially state/local) income tax you want withheld from your distribution. Generally, non-rollover distributions are subject to 20% federal tax withholding, but you can request more or less (down to 0% with a valid reason and proper form submission like IRS Form W-4R).
Delivery Method: Choose between direct deposit or a physical check.
Rollover Information (if applicable): If you're rolling over funds to another qualified account (IRA or new 401(k)), you'll need the payee/trustee name, account number, type of account, and mailing address of the receiving institution.
Sub-heading: Required Documentation for Hardship Withdrawals
For hardship withdrawals, you must provide supporting documentation that proves your immediate and heavy financial need. Examples include:
Medical Expenses: Explanation of Benefits (EOB) from your insurance provider showing amounts owed, medical bills (that are not already paid or collection notices).
Principal Residence Purchase: Loan estimate from the lender, signed purchase contract or intent-to-purchase agreement.
Eviction/Foreclosure Prevention: Eviction notice, foreclosure notice, or other official documentation.
Funeral Expenses: Funeral home invoice or statement.
Damage to Principal Residence: Repair estimates, insurance claim denials, or other documentation proving the damage and cost of repair.
Education Expenses: Tuition bills, invoices for qualified educational expenses.
Crucially, the documentation must reflect the unacceptable reasons/items mentioned by Voya. For example, medical bills already paid or collection agency notices might not be sufficient.
Step 3: Initiate Your Withdrawal Request with Voya
With your information and documentation in hand, you're ready to contact Voya.
Sub-heading: Methods for Requesting a Withdrawal
Voya typically offers a few ways to initiate a withdrawal:
Online Through Your Voya Account: This is often the most convenient method. Log in to your Voya account, navigate to the "Loans & Withdrawals" or "Withdrawals" section, and follow the prompts. You may be able to complete the entire process online, including uploading necessary documents for hardship withdrawals.
By Phone: You can call Voya's customer service. Be prepared for security questions to verify your identity. A customer service associate can guide you through the process, explain your options, and potentially pre-fill forms for you.
General Voya Customer Service for 401(k) inquiries: You may find various numbers depending on your specific plan. A common number is 1-800-584-6001. For some plans, the number might be 1-855-674-4015 (855-MSI-401K). Always check the contact information provided on your specific plan's Voya website or statements. Customer Service Associates are usually available Monday-Friday, 8 AM to 8 PM ET (or similar hours, excluding New York Stock Exchange holidays).
Through Your Employer (for active employees): Some employers require you to go through their HR or benefits department to initiate a 401(k) withdrawal, especially for active employees. They will then coordinate with Voya.
Sub-heading: Important Considerations During the Request Process
Special Tax Notice: Federal law may require you to review a "Special Tax Notice" before a withdrawal. You might be asked to acknowledge that you've received and read this notice during the process.
Review All Information Carefully: Double-check all entered information, especially banking details and withdrawal amounts, to avoid delays or errors.
Additional Paperwork: Some complex transactions or specific plan rules might require additional forms or paperwork. If so, Voya will provide instructions and the necessary forms. Ensure all required signatures are obtained and all relevant pages are returned (not just the cover letter).
No Notes on Forms: Voya typically requests that you do not write any notes or special instructions on the official forms. If you have questions, communicate them separately to customer service.
Social Security Number: Always include your SSN on any forms when asked.
Step 4: Await Processing and Funds Disbursement
After submitting your request and all required documentation, Voya will begin processing.
Tip: Pause whenever something stands out.
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Sub-heading: Processing Times
Processing times can vary depending on the type of withdrawal and whether all documentation is complete and accurate.
Standard Withdrawals (e.g., age 59½, termination): Once your request is complete and approved, checks and confirmations are often mailed within 2 to 3 business days. Direct deposit/ACH transfers may take 2-3 business days for funds to settle in your bank account after the processing is complete.
Hardship Withdrawals: These often take longer due to the need for documentation review and approval. After your completed application and supporting documentation are submitted and approved by Voya, the check will typically be mailed within 2 to 3 business days. The entire process from application to receiving funds can take longer, especially if there are questions about documentation.
Sub-heading: Monitoring Your Request
You can usually monitor the status of your withdrawal request by logging into your Voya online account in the "My Mailbox" or "Statements & Documents" section, or by calling customer service.
Step 5: Understand the Tax Implications and Plan for Them
This is perhaps the most critical step after receiving your funds. Ignoring the tax consequences can lead to significant financial surprises.
Sub-heading: Key Tax Considerations
Ordinary Income Tax: All withdrawals from a traditional 401(k) are subject to ordinary income tax. This means the money you withdraw is added to your taxable income for the year, and you'll pay taxes on it at your marginal tax rate.
20% Federal Tax Withholding: For non-rollover distributions, Voya is generally required to withhold 20% for federal income tax. This is a prepayment towards your tax liability, not necessarily the total tax owed. You may owe more or less when you file your tax return.
10% Early Withdrawal Penalty (Under 59½): If you are under age 59½ and take a distribution that doesn't qualify for an IRS exception (such as a hardship withdrawal or permanent disability), you will likely be subject to an additional 10% early withdrawal penalty on top of your ordinary income tax.
Penalty Exceptions: Some common exceptions to the 10% penalty include:
Death or permanent and total disability.
Substantially Equal Periodic Payments (SEPP).
Qualified medical expenses exceeding 7.5% of your Adjusted Gross Income (AGI).
Withdrawals due to a federally declared disaster.
Withdrawals after separation from service at age 55 or older.
Qualified reservist distributions.
IRS Form 5329 is used to report the 10% additional tax or to claim an exception.
State and Local Taxes: Depending on your state of residence, your withdrawal may also be subject to state and local income taxes. Some states have their own withholding rules.
Impact on Adjusted Gross Income (AGI): Your 401(k) withdrawal will increase your AGI, which could affect other tax benefits or credits you might be eligible for.
Form 1099-R: Voya will send you a Form 1099-R in January of the following year, reporting the distribution amount and any taxes withheld. You'll need this form to file your income taxes.
Sub-heading: Consult a Tax Professional
Given the complexities, it is highly recommended that you consult with a qualified tax advisor or financial planner before initiating a withdrawal. They can help you understand the full tax implications for your specific situation and advise on the most tax-efficient strategies.
Step 6: Update Your Retirement Plan (If Applicable)
If you've taken a significant withdrawal, especially an early one, it's wise to reassess your overall retirement strategy.
Re-evaluate Your Savings Goals: You might need to adjust your future contributions or extend your working years to compensate for the withdrawn funds.
Increase Future Contributions: If possible, consider increasing your contributions to your 401(k) or other retirement accounts to help replenish the funds you've pulled out.
Consider a Financial Advisor: A financial advisor can help you develop a revised retirement plan that accounts for the withdrawal and helps you stay on track for your long-term goals.
Tip: Take your time with each sentence.
Step 7: Manage Your Funds Responsibly
Whether you've used the funds for an emergency or a planned expense, ensure they are used for their intended purpose and managed wisely. Avoid the temptation to spend more than necessary, as this will only exacerbate the long-term impact on your retirement.
10 Related FAQ Questions:
How to determine if I'm eligible for a hardship withdrawal from my Voya 401(k)?
You are eligible for a hardship withdrawal if you have an immediate and heavy financial need that falls under specific IRS-defined categories, such as unreimbursed medical expenses, preventing eviction/foreclosure, purchasing a primary residence, funeral expenses, or certain home repair costs. You will need to provide documentation to prove this need.
How to find my Voya 401(k) account number?
Your Voya 401(k) account number can typically be found on your statements, online when you log in to your Voya account, or by contacting Voya customer service directly.
How to update my banking information for Voya 401(k) withdrawals?
You can usually update your banking information (routing and account numbers) by logging into your Voya online account in the "My Profile" or "Account Settings" section. Be aware that Voya may have a waiting period (e.g., 7 days) before releasing funds to newly added banking information for security purposes.
How to avoid the 10% early withdrawal penalty on my Voya 401(k)?
To avoid the 10% early withdrawal penalty, you generally need to be 59½ or older, or qualify for one of the IRS exceptions, such as permanent disability, substantially equal periodic payments (SEPP), or withdrawals after separation from service at age 55 or older. Hardship withdrawals are subject to the penalty unless an exception applies.
QuickTip: Reflect before moving to the next part.
How to roll over my Voya 401(k) to an IRA?
To roll over your Voya 401(k) to an IRA, you can initiate a direct rollover by providing Voya with the payee/trustee name, account number, type of account, and mailing address of your IRA custodian. This moves the money directly without it ever touching your hands, thus avoiding taxes and penalties.
How to contact Voya customer service for 401(k) withdrawals?
You can contact Voya customer service for 401(k) withdrawals by calling their dedicated lines, such as 1-800-584-6001 or 1-855-674-4015 (855-MSI-401K), or by using the chat function or email option on their website. Have your account details ready.
How to track the status of my Voya 401(k) withdrawal request?
You can typically track the status of your Voya 401(k) withdrawal request by logging into your online Voya account and checking the "My Mailbox" or "Statements & Documents" section, or by calling Voya customer service for an update.
How to calculate the taxes on my Voya 401(k) withdrawal?
The taxes on your Voya 401(k) withdrawal will depend on your marginal income tax bracket, any applicable state and local taxes, and if you are under 59½, the additional 10% early withdrawal penalty (unless an exception applies). It's best to consult a tax advisor for a precise calculation based on your individual circumstances.
How to get the "Special Tax Notice" from Voya for my 401(k) withdrawal?
You can usually obtain a copy of the Special Tax Notice from the Voya website (often in a forms or documents section), or by contacting Voya customer service who can mail it to you. You may be required to acknowledge receipt of this notice when requesting a withdrawal.
How to handle an outstanding 401(k) loan from Voya if I withdraw my funds?
If you have an outstanding 401(k) loan and you leave your employment or take a full distribution, you may be required to repay the loan in full within a short timeframe (e.g., 60 days). If you don't repay it, the outstanding balance will likely be treated as a taxable distribution, subject to income taxes and potentially the 10% early withdrawal penalty if you're under 59½.
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