Thread regarding Dream Center Education Holdings, LLC (DCEH) layoffs

For anyone over 55:

You will still be required to pay the 20% in taxes if you cash out.

But, you will not have to pay the 10% early withdrawal penalty at the end of the year.

If you have over $5000 in your 401K:

You do NOT have to move it from Fidelity. It can stay right in your Fidelity account. However, you will no longer be able to contribute to it.

And, being that you are now separated from your employer--- you will be able to cash out/roll it into another account at any time in the future.

Additional info:

Whoever brought up that cashing out a 401K might have an effect on your unemployment benefits, good point!!

Check with your state before you do it, because it could end up hurting you.

replying to the following: "If you cash out at the 10% tax, 55+ age, does the amount you cash out when you file annual income taxes does it count as income? Are we taxed on it again?"

Of course it counts as income. You were not taxed on it when you put it in your 401k. That was a tax deferred investment. It's deferred until you take it out and then you are taxed on it. So you are not being taxed on it again. It was not taxed before.

To the other person that asked if there is a penalty for rolling into an IRA, the answer is no. The key is not having the money in your hands at any point. It must be rolled directly from the 401k to the IRA using proper forms to do so, and then you will not have a penalty.

Employment status was updated yesterday 1/30 with Fidelity.

Be careful with doing a cash-out. Check with your state because it may be viewed as income that can alter eligibility and amounts of Unemployment. Best to just check with your local unemployment office before doing anything other than a roll-over to IRA

If you cash out at the 10% tax, 55+ age, does the amount you cash out when you file annual income taxes does it count as income? Are we taxed on it again?

Thank you so much.

You have a few things that need adding to this statement. I just went through this experience in past week.

1. No fees to rolling to IRA

2. You can keep the same investments that are in DCEH funds in your IRA account.

3. If you are 55+ you will only be charged 10% for taxes and not a 10% penalty to cash out due to termination.

4. You can take a one time cash withdraw of any amount when moving 401K to an IRA. It will only have a 10% taxes fee, no penalty. After moving to IRA 20% tax / penalty charge for each withdraw..

5. According to Fidelity - DCEH account will probably be renamed in next few weeks or could be eliminated so you may be forced into an IRA or cash out scenario.

6. It may take up to a month - two pay cycles for your termination to update at Fidelity. It did for me.

7. You can apply for unemployment immediately without the Fidelity update but scan your termination letter so you can send it in as part of your unemployment application.

Hope this helps!

I do not "think" that there is a penalty to roll into an IRA, but not positive.

Thank you. Do you know if there is a penalty to roll into an IRA?

thanks! --