Ok, I currently have about $7,500 in my 401k at my current place of work. (I'm only 22) I want to go to a good school, preferably Watkins & Shepard, and I have so little in my 401k, losing money on it in this economy, and 40 years to make it up. I understand that I will only see about $4000 of that $7500 after all taxes and fees are taken out but that would pay for school. Good idea or bad?
I have also heard that if I close that account I can't ever get another 401k account, is that true?
Tapping 401k
Discussion in 'Questions From New Drivers' started by JW430, Jul 27, 2009.
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When I was a few years older than you, I left a company and cashed in my 401K to help me cover expenses. I had about what you currently have invested. If you cash it in, expect to pay about 30-40% in taxes and early with withdrawl fees IIRC.panhandlepat Thanks this. -
If you are in an employer sponsored 401k program AND they have contributed funds to your account as in a company "match" you may lose some of the money your employer put in if you are not 100% vested.
A better plan would be to leave the money in your 401k (the stock market will rally and you will have had the benefit of buying in at a low rate) and look into some local grants or job employment re-training programs to get the training cheaply.
Of course you could also look into company sponsored training. Just be aware that you will have to work for that company for 1 to 2 years to get the training for "free." You will need to get experience anyway so count on staying with your first job for at least 1 year anyway.
panhandlepat Thanks this. -
I'm expecting half to a little more, but if that gets me through Driving School and into a truck I am happy. I would borrow against it but if I leave my current company I have to pay the full balance of the loan within 60 days or end up paying the taxes and early withdrawal fee anyway...
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Some relatively good news on that subject, I just talked to my dad (who also happens to be my boss) and he said that it is my money, doesn't matter what the company has contributed so I could in theory take out the whole amount and get that $4000.
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i STILL wouldnt touch it though why pay 40% on a "loan" , when you might be able to get one at 10-20 somewhere else.
although banks aren't lending a bunch lately it is worth looking into.
getting out of the 401K when the market is down AND pay 40% on top??Last edited: Jul 27, 2009
jlkklj777 Thanks this. -
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Circumstances vary.
But I take your point. -
i was comparing "cashing out" as basically like a "loan" where you pay 40% interest to BORROW your OWN money
sorry, dave ramsey fan here
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