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    buck1274's Avatar
    buck1274 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Jan 30, 2008, 02:49 PM
    401k Early withdrawal penalty
    I am wondering how much of a penalty I will have to pay if I clean out my IRA early?
    JBeaucaire's Avatar
    JBeaucaire Posts: 5,426, Reputation: 997
    Software Expert
    		  
    #2

    Jan 31, 2008, 12:54 AM
    It is one of the most expensive ways to get money. An IRA and a 401k each have different penalties, but the double hit you take with interest penalty and withdrawal penalty could eat up 30-40% of the money you withdraw. Would you ever pay an immediate $350 fee to borrow $1000?

    Borrowing money is way cheaper. There are SOME things you can borrow against a 401k for that won't get you hit as hard, but you still need to pay it back.

    This is a last ditch financial move. Don't do it unless the lions have broken through the gate and you have no other choice.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Feb 1, 2008, 10:19 PM
    FOUR WORDS: DO NOT DO IT!

    The 30-to-40% may be a conservative estimate. It depends on your tax bracket and where you live.
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