How Do I Withdraw My Retirement or 401k Money from My Merrill Lynch Account?

You can withdraw the retirement funds or 401k money from your Merrill Lynch account if your plan allows it. You can either make a hardship withdrawal or borrow against your 401k. the process of withdrawing the funds is done online. You should call Merrill Lynch if you have a problem with the process.

Feb 19, 2020

If you are currently an employee contributing to a 401k plan, then you know that there are many benefits to keeping the funds in the plan until you retire. Many of them pertain to the tax advantages of investing through your 401k.

On the other hand, life is an uncertain endeavor and plans often go array, even a 401k plan. In such a scenario, you may be forced to withdraw funds from your 401k or retirement account well before you retire.

Before withdrawing your retirement or 401k from your Merrill Lynch account, it would be prudent to know the effects of conducting such an action. When short or long term needs arise, you need to know exactly what is in store for you.

401k Plans

You may be able to borrow against your 401k account if your plan allows it. You will then have to repay the principal and interest to your 401k account.

If you are taking out money from your 401k account for a long term project such as buying a home, it could help you get a lower mortgage rate. It could also eradicate the need for you to buy mortgage insurance.

The downside to withdrawing money from your 401k account is that it will reduce the potential for your funds' tax deferred growth. This will make it significantly harder to prepare for retirement.

Another disadvantage of taking funds out of your 401k account at Merrill Lynch is that a huge chunk of your paycheck will go towards servicing the loan. If loan payments affect your 401k contributions, then you will make retirement very difficult for yourself.

You also risk the loan amount you take from your 401k being treated as a taxable distribution meaning you may end up owing federal and state income taxes. Only by repaying the loan as quickly as possible can you avoid these taxes.

Hardship Withdrawals

You may be allowed to withdraw funds from your retirement account at Merrill Lynch if you have an "urgent and heavy financial need". In such a scenario, you may be forced to take money out of your retirement fund.

You may be required to prove that you indeed need the money for a hardship. Some hardships such as acute medical emergencies or a foreclosure on your home are easy to prove.

It might be quite difficult to get your retirement account back on track after making a hardship withdrawal. There may also be tax implications which make it more difficult to make new contributions to the fund.

How to Withdraw

The process of withdrawing your retirement fuds or 401k from your Merrill Lynch account is more than just simply making a request. The type of account and when you withdraw your funds will have a substantial impact on how much you pay to access the funds.

The process of withdrawal is as follows:

1. Get a One Time Distribution Form from Merrill Lynch. Fill it with your personal information, including your name, date of birth, phone number and Merrill Lynch account number

2. Offer a reason for the funds withdrawal. The reason is more for the IRS than for the bank. You will not have to include it in the form but a Merrill Lynch rep will contact you for the reason

3. State how much you would like to withdraw from your account. There are no minimum or maximum withdrawal amounts unless you have a traditional IRA and are age 70 or older. Merrill Lynch offers a required minimum distribution calculator and an automatic required minimum distribution service to help customers determine the withdrawal amount

4. State if you want Merrill Lynch to withhold the required taxes from your distribution automatically or whether you would rather receive the entire sum and pay the taxes yourself

5. State how you want to receive the funds

6. Submit the form and you should receive the funds within 10 business days.

If you have any problems with the process above, contact Merrill Lynch customer service directly.

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Christian has been writing about long hold times and customer service call center experiences since 2010. He's been featured in Bloomberg, the Wall Street Journal and the Boston Globe.

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