How to Cash Out Your 401(k) with Voya: A Comprehensive Guide
Life happens, and sometimes, accessing your 401(k) funds becomes a necessity rather than a choice. Perhaps you're facing an unforeseeable emergency, considering a career change, or simply trying to understand your options as you approach retirement. If your 401(k) is managed by Voya, navigating the withdrawal process can seem daunting. But don't worry, we're here to break it down for you, step by step!
Ready to explore your Voya 401(k) withdrawal options? Let's dive in!
Step 1: Understand Your "Why" – Are You Eligible for a Withdrawal?
Before you even think about submitting forms, it's absolutely crucial to understand why you want to cash out your 401(k) and if your reason aligns with Voya's (and the IRS's) rules. Your eligibility for a withdrawal, and the potential tax implications, depend heavily on your specific circumstances.
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| How Do I Cash Out My 401k Voya |
Sub-heading 1.1: Common Reasons for Voya 401(k) Withdrawals
Voya, like most 401(k) providers, adheres to IRS regulations regarding when you can access your funds. Here are the most common "triggering events" that typically allow for a withdrawal:
Reaching Age 59½: This is the most straightforward scenario. Once you hit this age, you can generally withdraw funds for any reason without incurring the IRS's 10% early withdrawal penalty. However, ordinary income taxes will still apply.
Termination from Employment: If you've left your job, you're usually eligible to take a distribution. There might be a waiting period (e.g., 45 days after termination with Voya) to ensure all contributions are settled.
Hardship Withdrawals: These are for immediate and heavy financial needs that cannot be met through other means. The IRS has very specific criteria for what qualifies as a hardship, and Voya will require documentation. Common qualifying reasons include:
Purchase of your primary residence (excluding mortgage payments)
Qualified post-secondary education expenses
Prevention of eviction from or foreclosure on your primary residence
Payment of non-reimbursed medical expenses
Burial or funeral expenses for a deceased parent, spouse, child, or dependent
Repair of damage to your principal residence that would qualify as a deductible casualty expense
Long-Term Disability: If you are on long-term disability, you may be able to take 100% of your account balance (excluding money in brokerage).
Death: In the event of your death, your beneficiaries will be able to access the funds.
Account Balance Under $5,000 (While Still Employed): Some plans may allow a small balance distribution if you haven't contributed for a certain period and haven't taken this type of distribution before. This is plan-specific.
Reaching Age 70½ (Required Minimum Distributions - RMDs): If you were born before July 1, 1949, you generally must start taking distributions from your 401(k) by April 1 of the year following the calendar year in which you reach age 70½. For those born after June 30, 1949, RMDs generally start at age 72 (or 73 for those turning 73 after December 31, 2022). This is a mandatory withdrawal to avoid penalties.
Sub-heading 1.2: The Importance of Your Plan Document
Each Voya 401(k) plan is unique and governed by its specific plan document. While the general rules above apply, your employer's plan might have additional restrictions or specific procedures. It's always a good idea to consult your plan document or contact Voya directly to confirm the exact withdrawal options available to you.
Step 2: Consider the Alternatives – Is Cashing Out the Best Option?
Cashing out your 401(k) directly is often referred to as a "distribution." While it provides immediate access to funds, it comes with significant drawbacks. Before proceeding, it's highly recommended to explore alternatives that could be more financially beneficial in the long run.
Sub-heading 2.1: The Downsides of a Direct Withdrawal
Tip: Reread slowly for better memory.
Taxes, Taxes, and More Taxes: Funds withdrawn from a traditional 401(k) are typically taxed as ordinary income. This means the amount you withdraw will be added to your taxable income for the year, potentially pushing you into a higher tax bracket.
10% Early Withdrawal Penalty (if under 59½): Unless you qualify for a specific IRS exception (like a hardship or disability), withdrawing funds before age 59½ will incur an additional 10% federal penalty tax. This can significantly reduce the amount you actually receive.
Lost Growth Potential: When you withdraw funds, you lose the power of compound interest on that money. Your retirement savings are designed to grow over decades, and taking money out early means missing out on potential future gains.
Impact on Retirement Readiness: This is perhaps the most significant long-term consequence. Cashing out your 401(k) can seriously jeopardize your financial security in retirement.
Sub-heading 2.2: Explore These Smarter Options
401(k) Loan: If your plan allows, you might be able to borrow from your 401(k) and pay yourself back with interest. The interest goes back into your account, and you avoid taxes and penalties as long as you repay the loan on time. However, if you leave your job, the loan generally becomes due immediately, or it will be considered a withdrawal subject to taxes and penalties.
Rollover to an IRA or New Employer's 401(k): This is often the best option if you've left your employer.
Direct Rollover: Voya sends the funds directly to a new IRA or your new employer's 401(k). This is generally tax-free and penalty-free and preserves the tax-deferred status of your retirement savings.
Indirect Rollover (60-Day Rollover): Voya sends you a check, and you have 60 days to deposit the entire amount into a new qualified retirement account. Voya will typically withhold 20% for federal taxes, so you'll need to make up that difference from other funds to roll over the full amount and avoid penalties. If you miss the 60-day deadline, the distribution becomes taxable and subject to penalties.
Leaving Funds with Voya: If your balance is above a certain threshold (often $5,000), you may be able to leave your funds in your Voya 401(k) even after leaving your employer. This allows your money to continue growing tax-deferred.
Step 3: Gather Your Information and Prepare
Once you've decided that a withdrawal is necessary and you understand the potential consequences, it's time to get organized. Having all your information ready will make the process smoother.
Sub-heading 3.1: Key Information You'll Need
Your Social Security Number (SSN)
Your Voya Account Number(s) (found on statements or by logging into your online account)
Your Personal Identification Number (PIN) for phone access (if applicable)
The exact amount you wish to withdraw.
Your reason for the withdrawal (especially for hardship withdrawals, as specific documentation will be required).
Banking information for direct deposit (checking or savings account number and routing number). Voya may require your banking information to be on file for a certain number of days (e.g., 7 days) before releasing funds.
Your tax withholding preferences (federal and state). You'll need to decide how much tax you want withheld from your distribution.
Any supporting documentation for hardship withdrawals. This is critical and can include medical bills, eviction notices, purchase agreements for a primary residence, etc.
Sub-heading 3.2: Review the Special Tax Notice
Federal law may require you to review a "Special Tax Notice Regarding Plan Payments" before requesting a withdrawal. This notice explains the tax implications of your distribution. You can typically find this on the Voya website or request a copy from customer service. You may be asked to acknowledge that you have received and read this notice.
Step 4: Initiate Your Withdrawal Request with Voya
Voya typically offers multiple ways to request a withdrawal.
Sub-heading 4.1: Online Portal (Recommended for Most)
Log in to your Voya Account: Go to the Voya Retirement Plans website (VoyaRetirementPlans.com) or your employer-specific Voya portal and log in using your credentials (SSN/Username and password). If it's your first time logging in, you may need to register.
Navigate to Withdrawals/Distributions: Look for sections like "Account," "Withdrawals," "Loans & Withdrawals," or "Request a Withdrawal." The exact navigation may vary slightly depending on your plan's interface.
Select Your Withdrawal Type: Choose the appropriate withdrawal type (e.g., Age 59½ withdrawal, hardship withdrawal, termination distribution, etc.).
Enter the Withdrawal Amount: Specify the amount you wish to withdraw.
Provide Reason and Documentation (if applicable): For hardship withdrawals, you'll be prompted to select the reason and upload or submit the required supporting documentation.
Choose Payment Method: Select how you want to receive the funds (e.g., direct deposit or check). Direct deposit is usually faster.
Set Tax Withholding: Indicate your federal and state tax withholding preferences. You can choose to have 20% federal tax withheld (the default for eligible rollover distributions) or elect a different percentage. For non-rollover eligible payments like hardship withdrawals, the default federal withholding is often 10% unless you elect otherwise.
Review and Submit: Carefully review all the information you've entered. Ensure everything is accurate before submitting your request. You may receive confirmation via email or through your online message center.
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Sub-heading 4.2: Phone Call
QuickTip: Go back if you lost the thread.
If you prefer speaking with someone or need assistance, you can call Voya's Customer Service.
Voya Customer Service Number: The general Voya Retirement Readiness Service Center number is 1-800-584-6001. However, some employer plans may have a dedicated Voya Savings Center number (e.g., 1-888-875-401K for Yum! Brands). It's best to check your plan documents or Voya's website for the most accurate number for your specific plan.
Be Prepared: Have all the information listed in Step 3.1 ready before you call.
Follow Prompts: When you call, you'll likely need to enter your Social Security Number and PIN. You can then navigate the automated system or press 0 to speak with a Customer Service Associate.
Discuss Options: The representative will guide you through the process, confirm your eligibility, explain tax implications, and help you complete the withdrawal request.
Sub-heading 4.3: Paper Forms (Less Common, but Available)
In some cases, especially for more complex withdrawals or if online/phone options aren't suitable, you may need to complete a paper form.
Access Forms: Voya's website usually has a "Forms" section where you can download the relevant withdrawal application (e.g., "Hardship Withdrawal Application" or "Payout Request Form").
Fill Out Carefully: Read all instructions thoroughly. Ensure all required fields are completed accurately.
Obtain Signatures and Documentation: Some forms may require your signature, a notarized signature, or additional signatures (e.g., spousal consent if applicable). Attach all necessary supporting documentation.
Mail or Fax: Send the completed forms and documentation to the address or fax number provided on the form. Keep copies for your records.
Step 5: Await Processing and Funds Disbursement
Once you've submitted your request, Voya will begin processing it. The processing time can vary.
Sub-heading 5.1: What to Expect During Processing
Verification: Voya will review your request and supporting documentation to ensure it meets all plan and IRS requirements.
Communication: Voya may contact you if they need additional information or clarification. Keep an eye on your email, phone, and your Voya online account message center.
Tax Withholding: Remember that federal and potentially state income taxes will be withheld from your distribution. For eligible rollover distributions, 20% federal tax withholding is mandatory if the money is paid directly to you (indirect rollover). For other withdrawals, like hardship, federal withholding might be 10% by default, but you can elect a higher amount.
Gross-Up Option (for Hardship): For hardship withdrawals, Voya may offer a "gross-up" option, where you can elect to increase the withdrawal amount to cover the anticipated taxes and penalties, so the net check you receive is closer to your needed amount.
Sub-heading 5.2: Receiving Your Funds
Direct Deposit: This is generally the fastest way to receive your funds, usually within a few business days after processing is complete.
Check by Mail: If you opted for a check, it will be mailed to your address on file. Ensure your address is up-to-date with Voya to avoid delays.
Step 6: Tax Implications and Post-Withdrawal Actions
Receiving funds from your 401(k) has significant tax consequences that you must be prepared for.
Sub-heading 6.1: Understanding Your Tax Bill
Ordinary Income Tax: All withdrawals from a traditional 401(k) are taxed as ordinary income.
10% Early Withdrawal Penalty: If you are under age 59½ and do not qualify for an IRS exception, expect to pay an additional 10% penalty on top of your income taxes.
State Taxes: Many states also tax retirement distributions. Be prepared for state income tax liabilities.
IRS Form 1099-R: Voya will send you IRS Form 1099-R, which reports your distribution. You will need this form when filing your income taxes.
Tip: Keep your attention on the main thread.
Sub-heading 6.2: Consult a Tax Advisor!
Voya does not provide tax or legal advice. It is absolutely essential to consult with a qualified financial advisor or tax professional before cashing out your 401(k). They can help you understand the full tax impact of your withdrawal, explore strategies to minimize your tax liability, and advise on your overall financial plan.
FAQs: How To Navigate Voya 401(k) Withdrawals
Here are 10 common "How to" questions related to cashing out your Voya 401(k), with quick answers:
How to access my Voya 401(k) account online?
Go to VoyaRetirementPlans.com or your employer's specific Voya portal. You'll typically log in with your Social Security Number and a password. First-time users may need to register.
How to find out my Voya 401(k) account balance?
You can find your account balance by logging into your online Voya account, checking your most recent statement, or calling Voya's customer service line.
How to initiate a hardship withdrawal from Voya?
Log in to your Voya online account, navigate to the "Withdrawals" or "Loans & Withdrawals" section, select "Hardship Withdrawal," provide the reason and supporting documentation, and follow the prompts. Alternatively, you can call Voya customer service.
How to roll over my Voya 401(k) to an IRA?
You can initiate a direct rollover (recommended) through your Voya online account or by calling customer service. You'll need the receiving IRA's institution name, account number, and type of account.
QuickTip: Keep a notepad handy.
How to avoid the 10% early withdrawal penalty on my Voya 401(k)?
Generally, you can avoid the penalty by waiting until age 59½, qualifying for a specific IRS exception (like hardship, disability, or a series of substantially equal periodic payments - SEPP), or performing a direct rollover to another qualified retirement account.
How to update my address with Voya before a withdrawal?
Log in to your Voya online account and look for a "Profile," "Personal Information," or "Contact Information" section to update your address. You can also call Voya customer service to update your details.
How to get the "Special Tax Notice Regarding Plan Payments" from Voya?
You can usually find this notice on the Voya Retirement Plans website, often in a "Forms" or "Publications" section, or request it by calling Voya customer service.
How to determine the tax implications of my Voya 401(k) withdrawal?
Consult a qualified tax advisor or financial professional. They can provide personalized advice based on your income, tax bracket, and the specifics of your withdrawal.
How to check the status of my Voya 401(k) withdrawal request?
Log in to your Voya online account and look for a "Transactions," "History," or "My Mailbox" section. You can also call customer service for an update.
How to contact Voya customer service for withdrawal assistance?
The general Voya Retirement Readiness Service Center number is 1-800-584-6001. For specific plan numbers, refer to your plan documents or the Voya website associated with your employer.
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