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    buzzy62's Avatar
    buzzy62 Posts: 1, Reputation: 1
    New Member

    Aug 4, 2008, 11:01 AM
    401k funds
    I need to cash out my 401k for to pay for emergency expeneces. What will this cost me
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man

    Aug 4, 2008, 11:15 AM
    Too much!

    Your 401K is the very, very last thing you touch. First, not all plans permit inservice withdrawals. If your plan does permit it, there will be a penalty of 10%. In addition, any funds you withdraw will be added to your taxable income for the year. This means anywhere from 20-40% will be lost to taxation. Plus there is the loss of investment income on the funds.

    Check if you plan has a loan provision. This is usually a much better alternative.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert

    Aug 8, 2008, 05:09 AM
    Check with your plan administrator.
    Many 401(k) plans allow employees to make a hardship withdrawal because of immediate and heavy financial needs. Generally, hardship distributions from a 401(k) plan are limited to the amount of the employee's elective deferrals only, and do not include any income earned on the deferred amounts.

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