I have alway reinvested the dividend in the 401k plan. If you elect to get distribution checks mailed to you, are you penalized if you’re not yet retirement eligible, or are you just taxed at normal income level rates?
4 replies (most recent on top)
You really need that penny-ante payout now?
And you're not managing your 401K actively (20% XOM maximum).
That is pretty sad.
'It's my money and I want it now' sad.
I have been receiving it as a check or direct deposit to my salary bank account. No penalty.
Makes a lot of sense to take the dividend money and invest in growth stocks for higher returns
Taxed as income, no penalty. I've been doing this for a couple of years to help pay college costs
😂
Checked into this myself the other day and looks like if you have the dividend sent to you instead of keep on investing inside the 401K the dividend would just be taxed as income. No 10% early withdrawal penalty even if you are under 59-1/2. Hope that help. Good luck to you.