Deciding to withdraw funds from your 401(k) is a significant financial decision with potential long-term consequences. While Voya, as a 401(k) plan administrator, facilitates these withdrawals, it's crucial to understand that Voya itself doesn't "charge" a percentage or a specific fee for the act of withdrawal in the same way a bank might for an ATM transaction. Instead, the costs associated with withdrawing from your Voya 401(k) primarily come in two forms: Voya's administrative fees for processing the distribution and, far more importantly, IRS taxes and penalties.
Let's dive deep into understanding what you might actually pay and how to navigate this process.
Understanding the True Costs: More Than Just Voya's Fees
Before we get into the step-by-step guide, let's clarify the different layers of "charges" you might encounter when withdrawing from your Voya 401(k).
Voya's Administrative Fees: These are typically flat fees charged for processing certain types of distributions. They are not a percentage of your withdrawal.
Federal Income Tax: Any withdrawal from a traditional 401(k) is considered taxable income. This means the amount you withdraw will be added to your gross income for the year and taxed at your ordinary income tax rate.
10% Early Withdrawal Penalty (IRS): This is often the biggest and most impactful cost for those under age 59½. Unless an exception applies, the IRS imposes a 10% penalty on top of your regular income tax.
State Income Tax: Depending on your state of residence, you may also owe state income tax on your withdrawal.
Now, let's proceed with the step-by-step guide.
 |
| How Much Does Voya Charge To Withdraw From 401k |
Your Comprehensive Guide to Withdrawing from Your Voya 401(k)
Step 1: Are you absolutely sure you want to do this?
Before you even think about numbers or forms, pause and deeply consider this decision. Withdrawing from your 401(k) early can have a drastic impact on your long-term retirement savings. You're not just taking out money; you're forfeiting future growth on that money, which, over decades, can amount to a substantial sum. Think about it: if you withdraw $20,000 today, that $20,000 could have grown to $80,000 or more by the time you retire, assuming a modest average annual return.
Ask yourself:
Is this truly an emergency?
Have I exhausted all other options? (e.g., emergency fund, personal loan, home equity line of credit, 401(k) loan if applicable)
Do I understand the tax implications and penalties?
If you're still reading, let's proceed, but keep the gravity of this decision in mind.
Step 2: Determine Your Withdrawal Eligibility and Type
Voya, as your 401(k) administrator, operates under IRS rules and your specific employer's plan provisions. Not everyone can just withdraw money whenever they want.
QuickTip: Use posts like this as quick references.
Sub-heading: Common Withdrawal Scenarios
Reaching Age 59½: This is the ideal scenario. Once you hit this age, you can generally withdraw funds without the 10% early withdrawal penalty. You'll still owe federal and potentially state income tax.
Separation from Service (Leaving Employer): When you leave your employer, you typically have several options, including rolling over your 401(k) to an IRA or new employer's plan, or taking a lump-sum distribution. If you take a lump sum and are under 59½, the 10% penalty usually applies, along with income taxes.
Hardship Withdrawal: This is for immediate and heavy financial needs where you have no other reasonable means to obtain the funds. The IRS has strict criteria for what qualifies as a hardship, such as:
Medical expenses
Purchase of a primary residence (excluding mortgage payments)
Tuition and related educational expenses
Payments to prevent eviction or foreclosure
Burial or funeral expenses
Repair of damage to your principal residence (that would qualify as a casualty deduction)
Be aware: Even if you qualify for a hardship withdrawal, it's generally still subject to income tax and the 10% early withdrawal penalty, unless a specific IRS exception applies (e.g., certain disability situations, or specific rules during declared disasters like the CARES Act in 2020, though these are temporary). Voya typically charges an administrative fee for processing hardship withdrawals.
Disability: If you become permanently and totally disabled, you may be able to withdraw funds without the 10% early withdrawal penalty.
Required Minimum Distributions (RMDs): At a certain age (currently 73), you are required to start taking distributions from your 401(k). These are not subject to early withdrawal penalties.
Sub-heading: How to Check Your Specific Plan's Rules
Log in to your Voya Account: Your Voya online portal is your first stop. Look for sections related to "Withdrawals," "Distributions," "Loans & Withdrawals," or "Plan Information."
Review Your Plan Document: Your employer's 401(k) plan document, usually accessible through your Voya account or your HR department, will outline the specific rules for withdrawals, including eligibility criteria and any plan-specific fees.
Contact Voya Customer Service: If you can't find the information online, call Voya directly. Their customer service representatives can explain your options based on your specific plan.
Step 3: Understand Voya's Administrative Fees for Withdrawals
While Voya doesn't take a percentage of your withdrawal, they do charge flat fees for processing certain transactions. These fees can vary slightly depending on your specific plan and employer's arrangement with Voya.
Sub-heading: Typical Voya Withdrawal Fees You Might Encounter
Based on available information (which can vary by plan), here are some common fees:
Full Distribution Fee: This might be charged for a complete withdrawal of your account balance. For example, some Voya plans may charge a flat fee of $75.00 for a full distribution.
Partial Distribution Fee: If you're taking out only a portion of your balance, there might be a lower fee, such as $25.00 for a partial distribution.
In-service Withdrawal Fee: If your plan allows withdrawals while you're still employed (e.g., for hardship), there might be a specific fee for this, potentially $50.00.
Hardship Withdrawal Processing Fee: Some plans explicitly state a processing fee for hardship withdrawals, which could be around $50.00.
Expedited Delivery Fee: If you need your check or funds faster, Voya might offer expedited mailing for an additional fee, perhaps $50.00.
Important Note: These are examples based on various Voya plan documents. You must verify the exact fees applicable to your specific 401(k) plan by checking your plan documents or contacting Voya directly. These fees are usually deducted directly from the amount you are withdrawing.
Step 4: Calculate the IRS Taxes and Penalties
This is where the true cost of an early withdrawal becomes apparent. This step is crucial for understanding how much money you will actually receive.
Tip: Jot down one takeaway from this post.
Sub-heading: Federal Income Tax Withholding
Voya is generally required to withhold 20% of your withdrawal for federal income tax, especially for eligible rollover distributions that you choose not to roll over.
For non-periodic payments (like a lump-sum withdrawal), the default federal withholding rate is often 10%, though you may be able to elect a higher withholding.
Crucially, this is just a withholding. The actual federal income tax you owe will depend on your total income for the year and your tax bracket. You might owe more than the amount withheld, or if your income is low enough, you might even get some of it back.
 |
Sub-heading: The 10% Early Withdrawal Penalty (If Applicable)
If you are under age 59½ and do not qualify for an IRS exception, an additional 10% penalty will apply to the taxable portion of your withdrawal. This is on top of your regular income tax.
Example: You withdraw $10,000.
Federal Income Tax: Assume your marginal tax rate is 22%. That's $2,200.
10% Early Withdrawal Penalty: That's $1,000.
Total Loss to Taxes/Penalties: $3,200 (excluding state taxes and Voya fees).
Net Amount Received (before Voya fees): $6,800.
Sub-heading: State Income Tax
Many states also tax 401(k) distributions. The rate varies significantly by state. Some states may require Voya to withhold state tax, while others may not. You are responsible for knowing and paying your state income taxes.
Action: Before initiating the withdrawal, use an online tax calculator or consult a tax advisor to estimate the total tax and penalty impact on your specific withdrawal amount.
Step 5: Initiate the Withdrawal Request
Once you've weighed the pros and cons, understood the costs, and are ready to proceed, you'll need to submit a withdrawal request to Voya.
Sub-heading: Steps to Request a Withdrawal
Log in to your Voya Account: Navigate to the "Withdrawals" or "Distributions" section.
Select Withdrawal Type: Choose the appropriate withdrawal type (e.g., "Age 59½ Withdrawal," "Hardship Withdrawal," "Separation from Service Distribution").
Provide Reason and Documentation: For hardship withdrawals, you will need to provide documentation to prove your immediate and heavy financial need. This could include medical bills, eviction notices, etc.
Specify Amount and Tax Withholding: Enter the amount you wish to withdraw. You may have options to adjust your federal and state tax withholding, but be mindful of the IRS rules and potential underpayment penalties if you under-withhold.
Choose Distribution Method: Select how you want to receive the funds (e.g., direct deposit to your bank account, check by mail).
Review and Submit: Carefully review all the information before submitting your request. Ensure all details are accurate to avoid delays.
Follow Up: Keep an eye on your Voya account or contact customer service if you don't see progress within a reasonable timeframe. The processing time can vary but is often a few business days after all documentation is received and approved.
Sub-heading: What to Expect After Submission
Processing Time: Voya typically processes withdrawal requests within a few business days once all required forms and documentation are received and approved.
Confirmation: You should receive a confirmation from Voya once your withdrawal has been processed.
Tax Forms: Voya will send you a Form 1099-R in January of the following year, reporting the distribution amount and any taxes withheld. You will need this form to file your income taxes.
10 Related FAQ Questions
QuickTip: Reread for hidden meaning.
Here are 10 frequently asked questions about Voya 401(k) withdrawals, with quick answers:
How to calculate the net amount received from a Voya 401(k) withdrawal?
Subtract Voya's administrative fees, federal income tax withholding (typically 20% initially), the 10% IRS early withdrawal penalty (if under 59½ and no exception applies), and any applicable state income tax withholding from your gross withdrawal amount.
How to avoid the 10% early withdrawal penalty from a Voya 401(k)?
Wait until age 59½, qualify for a specific IRS exception (e.g., disability, substantially equal periodic payments, certain medical expenses), or roll over the funds directly to another qualified retirement account.
How to initiate a hardship withdrawal from my Voya 401(k)?
Log in to your Voya account, navigate to the "Withdrawals" section, select "Hardship Withdrawal," and follow the prompts to provide documentation proving your qualifying financial need.
How to know if my Voya 401(k) plan allows in-service withdrawals?
Check your employer's specific 401(k) plan document on your Voya online portal or contact Voya customer service directly, as in-service withdrawals are not universally permitted.
How to check the specific administrative fees Voya charges for my 401(k) withdrawals?
QuickTip: A careful read saves time later.
Access your specific Voya 401(k) plan's fee schedule or plan document through your online account, or call Voya customer service to inquire about the exact charges for your plan.
How to roll over my Voya 401(k) to an IRA instead of taking a withdrawal?
Upon separating from your employer, instruct Voya to perform a direct rollover to your chosen IRA provider. This avoids immediate taxes and penalties.
How to get my Voya 401(k) withdrawal funds quickly?
Once approved, choose direct deposit for the fastest electronic transfer to your bank account, or inquire about expedited check delivery options (which may incur an additional fee).
How to understand the tax implications of a Voya 401(k) withdrawal before I take it?
Consult a qualified tax advisor or use a reliable online tax calculator to estimate the federal and state income tax liability, along with any potential early withdrawal penalties, based on your specific situation.
How to determine if a 401(k) loan is a better option than a withdrawal from Voya?
A 401(k) loan allows you to borrow from your account and repay yourself with interest, avoiding immediate taxes and penalties, but requires repayment and can limit growth; a withdrawal is permanent and immediately taxable. Compare the pros and cons with a financial advisor.
How to find out what documentation is required for a Voya 401(k) hardship withdrawal?
When initiating the hardship withdrawal request through your Voya online account, the system or Voya customer service will specify the exact documentation needed to prove your financial hardship (e.g., medical bills, eviction notice).
 |
