I know there have been times when people have had to go into their 401K plan for various expenses. Have you had to do this before and was it worth it in the end to tap into those funds?
This is a tough question. I have never taken out any money from my 401(k). My understanding is that if you do, you have to pay taxes plus a 10% penalty on the withdrawal. Normally I would say "no", one should never withdraw from their 401(k). However, although the economy has recovered slightly I am still deeply concerned about the future of our stock market, and all the 401(k)'s) that are tied to it. If you took the money out for something really important like maybe paying off your mortgage, it might not be a bad idea. I would at least keep a very close eye on the entire stock market and if it starts nosediving like it did a few years ago, I would get the money out before your balance goes way down or at least try and get the balance moved to something safer. With all this financial unrest in Europe and our massive debt in the U.S., our economy is still on shaky ground.
I have done it once. It was rather costly. But it was an emergency and I needed the funds. I do regret having to be in the situation to withdraw funds. That was very poor planning on my part.
I've never heard of just taking cash out of a 401K, only cashing out one's 401K. If you cashout there is a penalty and a fairly large tax besides what this means in terms of retirement in the future, so be careful.
I had taken out money from a 401k before. I had 2 401k's because I had just changed jobs and started a new 401 k with my new job. I fell on financial strain a little bit but more so than that when I checked on my 401k from my prior job the value went down 40% due to the economic crisis we are in. I decided cash out my vested 401K from my old job as to not lose it in it's entirety. I realized in advance there would be a 20% penalty since I was under retirement age. I cashed out and also requested taxes be removed at the same time to avoid worrying about paying later when I did my taxes in April. A lot was taken out however I was able to get myself in a little better financial position and also pay off a loan. I didn't have regrets, but then again I had another 401k as backup and didn't have that much to start so I guess the sting in taking out the fund didn't hurt too much.
