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    2BENLIGHTEN's Avatar
    2BENLIGHTEN Posts: 2, Reputation: 1
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    #1

    Mar 15, 2007, 08:14 AM
    401K early withdrawal for business
    I am currently unemployed. I have a 401k with my last company that did not match my contributions. It's not a lot of money and I would like to withdraw / put it towards my sisters business she plans to expand and to work. Interested in the penalties involved / the best way to go about this. Is that a type of investment to avoid some of the penalties?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    May 11, 2007, 01:12 PM
    You will pay taxes (state and federal) at your current tax rate plus a 10% Early Withdrawal Penalty.

    The total tax load can eat up to 50% of the distribution, so it is probably NOT a good idea.
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