Thread regarding State Farm Insurance layoffs

Realizing this is probably the last thing on everyone’s mind right now, please review where you are with any outstanding 401K loans. When you leave, you essentially have two choices. Repay those loans within 60 days or have them treated as a distribution. In the case of the latter, understand that any outstanding loan balance will be subject to a 10% IRS penalty and it will be taxed as ordinary income. So, if you’re in a 25% Federal bracket and have a 5% State tax rate, your staring down a tax liability of 30% plus the 10% penalty. I know many of us don’t have the resources to cough up that kind of cash at tax time so if there’s any way to avoid it, please consider it. At a minimum, at least be armed with the information so you can plan accordingly. Also, if you’re 55 at the time of your severance, the IRS does allow for penalty free distributions of such a qualified plan from a former employers plan should you need to draw upon it later. IF you’re in that group, educate yourself BEFORE you do a rollover. It has to remain in your former employer’s plan to avoid the penalty. Once you move it, its NOT Either way, it’s still subject to being taxed as ordinary income. As with many things tax related, the issues can be complex. Seek the advice of a CPA or financial advisor. Speaking from personal experience, the paperwork you’ll receive from AON concerning these situations can seem daunting the first read through. I wish everyone the best beyond SF. There is life and opportunity even when it may seem there’s not.