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My father (70) is disabled and has advanced Parkinson's. He is living in an Assisted Living Facility, and his bills are adding up. I have a fully signed Medical and Financial Power of Attorney, and I need to know if I can get access to his 401K investments and get money to pay his bills. Am I allowed to do that? Would I need to contact an attorney to have that done?

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Contact his brokerage with your POA.
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Contact the 401(k) company and ask them what they need. It’s usually an official copy of the POA document. With that you should be able to access the money without the help of an attorney. But you still may need an attorney for other issues that arise as your father’s disease progresses. I wish you the best.
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Depends upon how good and well written a POA you have. I am assuming done by an attorney. Signed means nothing. Notary means nothing. Attorney means everything. See the bank officers at the bank.

If you don't fully understand POA be sure to see an elder law attorney to find out how to arrange all funds. That is an enormous help and your POA pays for that out of your Dad's funds. He will teach you how to set up accounts, give you testamentary papers to give banks, help walk you through how to sign things and how to pay and how to present your documents to all banks.

Everything should be done to avoid 401K withdrawals to last as they will be taxed and have tax consequences. It is very important your record keeping be meticulous on every penny in and every penny out with good file keeping. This is a legal financial fiduciary duty and that's why you need to know exactly how to proceed. See that attorney.
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Kmi, as Alva says, make sure you look into information on what order you should spend dad's assets in (the Wiki at www.bogleheads.org is a good reference).

Withdrawals from 401k will be taxed as income and you should arrange to have the correct percentage from the distribution sent to the IRS and state tax authority as you make the distributions. This is easier than sending in estimated tax payments because withholding is always counted as being timely; if you take a distribution late in the year and send in an estimated tax payment, you may end up with a penalty.

Also, make sure you get information from the facility about what portion of dad's monthly bill is deductible as medical expenses.
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TNtechie Oct 2023
Withdrawls MAY BE and usually are, taxable. If someone was contrary enough to put AFTER tax money in (on the principle that tax rates would continue to rise) then the withdrawal is not subject to federal taxes - neither principle nor interest. I agree most of us need to meet with a good attorney or CPA to know how to best handle the money.
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DO NOT take it upon yourself to take out withdrawals from your father’s 401(k) without first being advised on the IRS’ rules and regulations as there might be hefty penalties involved. Call the Human Resources Department at your father’s former employer and get all of your questions answered about his 401(k) and how to make withdrawals. Be prepared to provide the POA to them just in case they tell you that they cannot give you this information.
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DrosieD Oct 2023
I'd think a former Human Resources might know all the financial things involved with withdrawal from his father's 401K. The former employer may not be working with the same company any longer an may not know. Since he has full POA he should be asking a tax consultant or an attorney who could explain all of this.
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Is the 401K his only source of funds to pay his bills? I ask because that $ represents pre-tax savings and any withdrawals will require a % of $ for taxes to be taken out. That is ok - you just need to know. If he needs the $, and has no other source of after tax funds, like savings, then you have to do what you have to do. The POA status you have should be enough to satisfy his 401K company. You just have to send proof of that status. You don’t seem to be as knowledgeable about managing his finances as one would expect. Please engage an attorney with expertise to help you and also educate yourself. That will help you make sound decisions for him.
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Jojothepogo Oct 2023
Dad is over 64.5. No tax implications.
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What is the point of 401k accounts and investments etc if you can't access them at age 70 suffering from Parkinsons? I just don't get it.
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olddude Oct 2023
The 401K can be accessed. The client did not know that. That's why they are asking the question.
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Kstay, it's not that he shouldn't access his retirement accounts to pay bills. It's that his POA should understand the tax implications, whether the withdrawals will push him into another tax bracket or over an IRMAA cliff. The deductibility of medical expenses can mitigate some of those concerns. There are LOTS of moving parts.

Also, when in retirement, there is a certain order in which you should spend resources. Taxable should generally be spent first as capital gains taxes are usually lower than income taxes.
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DrosieD Oct 2023
He holds the POA. A POA gives no indication what the taxes would be. He needs to talk with the company holding the IRA or 401K. He could speak with whoever prepares his father's taxes, explaining to him that it is for medical expenses, which are a write-off, and go from there. If his father didn't have someone doing his taxes for him I'd suggest he consult an attorney or financial planner. We're all overwhelmed here when asking for advice.

With his full POA he can act on his father's behalf. I've had to start giving my full POA to my husband's doctors, hospitals etc. so they will talk with me and not assume he understands everything. He has Alzheimer's. Many times those with the full POA don't always know where to turn or how to use it.
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I was forced to retire at age 45 due to my health. I also had to move back to my home state in order to be close to family so they could help me when I needed it - I didn't have family or close relationships where I was living. I needed to pay for the move and secure housing, so I needed to cash out my 401k. The advisor I worked with at Merill Lynch was fantastic. After, of course, explaining the possible penalties for early withdrawal and taxes, he asked many questions about why I was withdrawing early. When I explained that it was due to health issues that had left me disabled, he did his research and found that if it was due to disability, I would not be penalized. I'm not sure if that was due to my employer's specific plan. I can't exactly remember now (this was 15 years ago), but he also told me what to discuss with my tax accountant in order to lower or totally alleviate the tax burden. In my case, it totally alleviated the tax burden. I don't know if this made any difference or not, but I did a total withdrawal and closed the account. I was able to make the cross country move, purchase my home outright, and pay off all the medical bills I had inccurred over the course of my treatments that I underwent in order to keep working as long as I did.
As others have said, definitely get all the plan information from the employer, talk to a financial advisor, and talk to a tax accountant. They, as a team, should be able to help you. Best wishes, and God bless!
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You need to get an attorney and manage all his finances, if he will let you.
While it may be useful / supportive to ask 'us' here about these things, you need to ask the financial institutions how to handle and get an attorney.

In other words, why are you asking us vs contacting an attorney?
These are legal matters that require professional legal advice and drawn up legal documentation giving you the authority you need.

And every state is different.
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olddude Oct 2023
They don't need to see an attorney. They already have a financial POA set up. They just need to contact the 401K plan administrator and set up whatever payout they want.
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Kimstark reminded me, below, that there are times the 401K can be accessed without penalty when there is illness and other need. I would contact the institution where the 401K is help or an elder law attorney for certain. You need expert advice for this complex question.
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olddude Oct 2023
The father is over age 59 1/2. All distributions would be penalty free.
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Make an appointment with an Elder Law Attorney in his area.

(copy and paste)
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-disability#:~:text=More%20In%20Retirement%20Plans&text=A%20plan%20participant%20may%20receive,still%20be%20reported%20as%20income.
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I have found that it’s not that difficult to get ahold of financial or medical information. You may not need to hire an attorney. 1) Find out which firm his 401k is in. Can your dad tell you this? If not, call his former employer and they can tell you what firm they contributed into for his 401k. 2) If your dad never set up an online account, which many older people never did, then you can set one up with your contact info. Be sure to add your POA to his account. You can then start drawing from his account. 3) If he already set up an online account, then you need to call the financial firm with his 401k. Many will just accept your POA. Others may require more.

Anyways, don’t freak out. It will likely be easier than you think. Or at least, that’s what I’ve found.
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Thank you for asking the question and I'm sorry this is happening to you and your Dad.

If you know where his 401K is, I suggest you contact the company holding the 401k. Since he is 70, the withdrawals will not be penalized. However, the 401k can trigger a taxable situation. In addition, the way you draw it out is dependent upon the plan's rules (I got blindsided by this...)

Contact the plan's administrator to find out what is needed and how to withdraw the money. Be prepared to be on the phone for a bit.

If you have to draw it out as a lump sum and he does NOT have an existing IRA account that has been open for at least 5 years, do NOT agree to rolling it over to a new IRA until you have talked to a retirement specialist. The money in a new IRA account cannot be touched for 5 years without penalty.

If you do not have a financial counselor or a financial planner or a wealth advisor, I suggest that you get one. Talk to your friends and get their recommendations. It is important that you get one that is knows the rules of the state that your Dad is a resident in.
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You should be able to use his 401k to pay his bills and AL is a bill.
Also, his taxes will be effected by it - and as long as it is billed under medical expense then it can be written off his taxes (at least here in California). Check with his tax guy.
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Kmi7688: Pose your query to an elder law attorney.
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