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Tapping 401k

Discussion in 'Questions From New Drivers' started by JW430, Jul 27, 2009.

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  1. Jul 27, 2009 #1
    JW430

    JW430 Medium Load Member

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    May 23, 2009
    Rocklin, CA
    0
    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?
     
    JW430, Jul 27, 2009
    JW430, Jul 27, 2009
    #1
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  3. Jul 27, 2009 #2
    rich_t

    rich_t Road Train Member

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    Closing one 401k account does not prohibit you from starting another one later.

    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.
     
    rich_t, Jul 27, 2009
    rich_t, Jul 27, 2009
    #2
    panhandlepat Thanks this.
  4. Jul 27, 2009 #3
    jlkklj777

    jlkklj777 20 Year Truckload Veteran

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    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.



    Not true.
     
    jlkklj777, Jul 27, 2009
    jlkklj777, Jul 27, 2009
    #3
    panhandlepat Thanks this.
  5. Jul 27, 2009 #4
    JW430

    JW430 Medium Load Member

    401
    37
    May 23, 2009
    Rocklin, CA
    0
    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...
     
    JW430, Jul 27, 2009
    JW430, Jul 27, 2009
    #4
  7. Jul 27, 2009 #5
    JW430

    JW430 Medium Load Member

    401
    37
    May 23, 2009
    Rocklin, CA
    0
    So basically I get only what I've put into it...well that sucks my personal balance is only $3700...looks like I would only see about half of what I previously thought. I wonder if I could get a personal loan from my bank for "educational purposes"
     
    JW430, Jul 27, 2009
    JW430, Jul 27, 2009
    #5
  8. Jul 27, 2009 #6
    JW430

    JW430 Medium Load Member

    401
    37
    May 23, 2009
    Rocklin, CA
    0
    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.
     
    JW430, Jul 27, 2009
    JW430, Jul 27, 2009
    #6
  9. Jul 27, 2009 #7
    panhandlepat

    panhandlepat Road Train Member

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    so you are 100% vested from DAY ONE?? :biggrin_2554:
    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??:biggrin_25512:
     
    Last edited: Jul 27, 2009
    panhandlepat, Jul 27, 2009
    panhandlepat, Jul 27, 2009
    #7
    jlkklj777 Thanks this.
  10. Jul 27, 2009 #8
    rich_t

    rich_t Road Train Member

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    Sounds like you are already fully vested then.
     
    rich_t, Jul 27, 2009
    rich_t, Jul 27, 2009
    #8
  11. Jul 27, 2009 #9
    rich_t

    rich_t Road Train Member

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    Cashing out a 401K is NOT the same as taking a loan against it.

    Circumstances vary.

    But I take your point.
     
    rich_t, Jul 27, 2009
    rich_t, Jul 27, 2009
    #9
  12. Jul 27, 2009 #10
    panhandlepat

    panhandlepat Road Train Member

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    good, maybe i worded it a little misleading LOL
    i was comparing "cashing out" as basically like a "loan" where you pay 40% interest to BORROW your OWN money:biggrin_255:
    sorry, dave ramsey fan here
     
    panhandlepat, Jul 27, 2009
    panhandlepat, Jul 27, 2009
    #10
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