Hi

Due to corporate downsizing, I will likely not have a job much past the first of the year and I don't expect any severence out of the deal either. I have been an exemplary employee for 7 years, but I know when the game is over. So, because of a large and cumbersome non-compete contract I will be signing upon my "resignation", it is necessary that I change careers entirely as there is no place I could continue being a designer without competing or moving to another state... and I am not interested in moving because my husband has a good job here already.

So, I have decided to salvage my Bachelor's of Fine Art, and get a masters in Art Education to make a life for myself as an Art Teacher.

Sadly, I have decided to accept the penalties and cash out my 401K to cover school, debts and living expenses in the interim.

I'm 31, so, I am feeling urgent about making this change now, vs later because I feel that by the time I am 35, I will be back in the 401K game and I can recover my losses over time with higher contributions.

But I am wondering if there is anything I am missing. Are there options I haven't thought about, or don't know about that I might be eligible for that might be a better fit for me?

Somebody mentioned changing the number of dependants I can claim on my w2 to the maximum, to minimize loss... I'm not sure I buy it... I am currently married filing single 0.

I've read about IRAs... but I don't understand it fully.

I've read about annual payments... but I don't understand that fully either.

I also have a cash balance pension. Can I cash that out as well?

Again, I am 31 years old.
My current 401K balance is $41,500
My current Cash Balance is $8,500

Any help, info or links to pertinent info is appreciated!
Hope to hear from you soon, thanks.

There is an exception to the 10% penalty for tuition expenses. But that's only for the coming 12 months. So I suggest that instead of withdrawing the whole amount, you withdraw just what you need for the year. You will still have to pay taxes on it, but if you are not working, your tax liability will be lower.

Forget the number of dependents issue that only affect withholding from salary. I would also leave the pension alone.

I don' understand why you would be signing a non-compete as you're being led out the door. If there was a juicy severance package for you that would be one thing, but since there isn't - why would you agree to sign it?