[Navigator 1971]

I am 44 and would like to wihtdraw from my 401K account. Can I do this ? Also my reason s for doing this is wipe out my monthly debt. The interest rates I am being charged far outweigh any return on investment I am getting on my 401K. Also, my employer does not contribute. They used too, but not anymore! I like to think this is a good decision on my part... do you agree? I feel being debt free opens up a lot of investing windows for me. I am aware there is a 10% penalty and at the end of the year, my income rises by the amount I am withdrawing. Thank you for any assistance you can offer.

[cdad]

A lot is going to depend on how your 401k is managed. Many do not allow for a withdrawl (outright taking of funds) so long as you remain employed by them. Instead they allow you to borrow against it. You would be put on a repayment plan and be charged interest but all the money goes back to you.

[ebaines]

I agree with califdadof3 that it's generally a better deal to take a loan against your 401(k) as opposed to a withdrawal. And very few plans allow active employees to make withdrawals unless the money is to be used for one of the so-called "hardship" purposes, which are:

1. Expenses for medical care previously incurred by the employee, the employee’s spouse, or any dependents of the employee or necessary for these persons to obtain medical care;
2. Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments);
3. Payment of tuition, related educational fees, and room and board expenses, for the next 12 months of postsecondary education for the employee, or the employee’s spouse, children, or dependents;
4. Payments necessary to prevent the eviction of the employee from the employee’s principal residence or foreclosure on the mortgage on that residence;
5. Funeral expenses; or
6. Certain expenses relating to the repair of damage to the employee’s principal residence.

Note that "being in debt" is not one of the hardships, so it's unlikely that your plan will allow you to make a withdrawal. But if course it doesn't hurt to ask.