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    debdon's Avatar
    debdon Posts: 1, Reputation: 1
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    #1

    Oct 12, 2006, 08:08 AM
    401K Early Withdrawal
    My company was purchased by another company that has established a new 401K. I have not yet done anything with my previous 401K. I would like to take the cash from my previous 401K and pay off my son's school loan. If I use the money to pay of the education loan, I know I will have to pay taxes on it but will I also have to pay a penalty since I am not yet 59 1/2?
    RichardBondMan's Avatar
    RichardBondMan Posts: 832, Reputation: 66
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    #2

    Oct 26, 2006, 05:41 PM
    Quote Originally Posted by debdon
    My company was purchased by another company that has established a new 401K. I have not yet done anything with my previous 401K. I would like to take the cash from my previous 401K and pay off my son's school loan. If I use the money to pay of the education loan, I know I will have to pay taxes on it but will I also have to pay a penalty since I am not yet 59 1/2?
    I am no CPA but my guess is yes you would have to pay taxes on the withdrawal just as though it were earned income, why not see if you have loan privileges, then there is no penalty, just interest on the loan. Try to avoid the tax penalty.
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