Who can cash a 401k check?

When you contribute to a 401(k), you expect to access the money in retirement. However, if you have an urgent need- with no other sources of income other than your 401(k), you may be forced to cash out some of your 401(k) money. Once you request cash out, the 401(k) plan will send you a check with your money. If you don’t have a bank account, you may want to know where to cash your 401(k) check.

If you don’t have a bank account, the cheapest way to cash a 401(k) check is to go to the issuing bank. Depending on the check amount, you can cash the check for free, or at a small fee. Alternative methods of cashing a 401(k) check include visiting a retailer that offers check-cashing services, using a prepaid debit card, or getting a payroll debit card from your employer. You may be required to show proof of ID to access the check-cashing service.

Where to Cash a 401(k) Check

If you don’t have a bank account, you have several options to cash your 401(k) check.

Issuing bank

If you are a member of the check-issuing bank, you can cash your 401(k) check for free. However, banks are not required to cash checks for non-customers except if you are cashing a check issued by that specific bank.

Usually, the payer must have a sufficient bank balance to cover the check value. Also, the bank may require the payee to show some form of identification such as your driver’s license or military ID.

Some banks may require payees to pay a check cashing fee, usually a percentage of the check amount. The check-cashing fee can be around $4 to $25.

Retailer

Some retail stores such as Kmart, Kroger, and Walmart offer check-cashing services. Check the retailer's website to know the store branches near you that offer check-cashing services. Each retailer has its requirements and fees, and you can check how much you can cash and the fees you will pay beforehand.

For example, Walmart charges $4 to cash checks up to $1000, and $8 to cash checks from $1000 to $5000. Walmart limits two-party checks to $200. If there is an open Kmart store near you, you can cash checks up to $2000, and two-party checks up to $500.

You will need some form of ID to access the check-cashing service at retail companies. For example, Walmart requires a valid ID to cash a check at any of its stores. 

Prepaid debit card

With a significant portion of the American population being unbanked, financial institutions offer prepaid debit cards to cater for this market segment. You can use the prepaid card to cash a check without having to open a bank account with the issuer.

Prepaid debit cards allow several check cashing options. You can deposit the check at an ATM, use an app to take a picture of the check, or set up a direct deposit so that funds will be loaded into your card.

Depending on the card you are using, you may be charged a monthly fee and an extra fee to cash a check. For example, the Walmart MoneyCard charges $2.50 for ATM deposits and a monthly fee of $5.94 if you load less than $1000 per month. Chase prepaid card has a monthly fee of $4.95, but it is free to deposit checks at any Chase ATM.

Check cashing outlet

Check-cashing outlets are known for the exorbitant prices, and they should be your last resort if you want to cash your 401(k) check. Some of these outlets require customers to be members first or buy check-cashing IDs to access the service.

The check-cashing fee can be a percentage of the check value, usually 1 to 12%, or a flat fee. For example, if the outlet charges 10%, you could pay $200 to cash a $2000 check. This may be too expensive for high-value checks, and you should consider alternative methods of cashing checks.

Sign check to someone you can trust

If you have a friend with a bank account, you can endorse the 401(k) check to them with their permission. First confirm if their bank accepts third-party checks, before signing the check to them.

If the bank accepts third-party checks, sign at the back of the check in the section designated for endorsement. Also, write the name of the third party you are endorsing at the back of the check. You may also need to show proof of identity by providing your driving license or other forms of ID. The check can then be cashed at the bank, and the friend will give you your cash.

Use a Payroll Debit Card

Some employers offer payroll debit cards to their employees, which can be used to load payroll checks. If your employer offers these debit cards, you can obtain the card and use it to cash your 401(k) checks. However, payroll debit cards may have certain limitations such as inactivity fees, overdraft fees if you overdraw the account and other hidden charges.

Compare Options of Cashing 401(k) Checks

Before deciding who can cash your 401(k) check, you should shop around and compare the various methods available in your location. Choose the cheapest and most flexible option of cashing a check, so that you will know where to go if you need to cash checks in the future.