Thinking Of Withdrawing From My 401k.

Look into taking a loan against it instead. Even though you're paying interest, you're also making interest. If the total interest you expect to payback is less than the 30% hit you'll take than this is the better option. You'll get the same amount of money(or more) and it wont cost you as much.

I'm obviously not privy to the details of your situation but if you can make minimum payments on the lowest interest rates and pay off the highest interest rates without having to take money from your 401k that's my recommendation. But everyone's situation is unique so in the end you need to decide what is best for you

edit: nevermind the borrowing you answered that while I was creating my post

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Originally Posted by Polygon

Well, borrowing is out. They'll only give me $1,200 and I don't plan to be with my current employer beyond the end of the year which causes problems if borrowing against the 401k.

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job transitioning is a risk man... so beware elminating any reserve you have at your disposal. Lets say your new boss hates you? or you can't stand him.

are you 100% vested? thats another thing to check. If you leave they might force you out of the 401k anyways.

I like to stock up before I take a new job, that way if I don't like my new boss/job I can tell them to f off and take some time off looking around.

if you have your own insurance policy you can pull from it without paying it back for a while normally(or you just have to pay back your own interest).

I took 2500$ a long time out of an insurance policy... cost me 200$ a year for about 5 years before i paid it back.(i was netting the 200$ in the account).

look at getting a private insurance policy, even a 50$ a month deal isnt bad at your age, they can be treated like a 401k also.

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Originally Posted by DocWalt

Obviously borrowing on your 401K is a much better idea than just withdrawing. Go for that if you want :p

Ok, it was so poorly worded, I had no clue what he was saying.

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no you just didn't read the post... skimmer!

Maybe it is different from state to state but in my state you can not take your 401K unless you get fired, quit or have proof of its absolute necessity to get by. This pisses me off and makes me want out of the plan even more. Basically its not your money until the government says so.

You do it once, it'll be easier to succumb to the temptation the next time you need bucks.
Hunker down, pay out the bills.
$3500 is not worth the loss of $5K which is now, at your point in time, going to start to generate good returns & interest

I personally dont have faith in the 401K system anymore. I think its a big scam to make wall street rich while you may make money or you may lose a lot.

Bad idea, never borrow from your 401k. Just not worth it.

You are selling your future short, time and compound interest will be your friend if you keep the money in there.

No, I read it Mikes, it was poorly worded.

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Originally Posted by EZnTn

You do it once, it'll be easier to succumb to the temptation the next time you need bucks.
Hunker down, pay out the bills.
$3500 is not worth the loss of $5K which is now, at your point in time, going to start to generate good returns & interest

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or sit there doing nothing... or even tank depending on what you have it in...

I've been looking into this, its not "just" a 30% hit.

Its you take the funds from your 401k it is 100% taxable. Federal, state and city/county if you have those. The entire amount will be added to your gross taxable wages.

You will have 20% deducted as a federal tax withholding.

You will have 10% deducted as a penalty.

What that means is that when tax time comes around you could be taxed in total greater that 20% and you could end up with a smaller refund or paying more(all dependent on your overall tax libality).