If a person were to withdraw their money that they have in a 401K plan at a company where they used to work, how much of a penalty do they pay? I know this is not the wisest thing to do, but I'm just wondering, since I'm contemplating something here.

I'm far from an economic wiz, but I reckon you should check out the small print of your related documents or ask the company directly. The charges will vary from company to company

Thanks, will do.

Nancy....if you place those funds into another tax sheltered account like a Roth IRA or another 401k plan, there is no penalty. You will pay a penalty if you choose to cash it out and then you will be taxed on it as well. I'd look for another account to place it in sweety.

You can also transfer it to another company where you work, then BORROW against it and that way you are liquid and you will simple be paying yourself back WITH interest.

DexMSR said:

Thanks for the hints, Dex, I appreciate it.

psychodelicide said:

Your Welcome sweety!

Whap!

DexMSR said:

Whap, Whap!

Actually, my name is Dr. Gimp Gimpuango, and I am King of Gimpopia. I have 2000,000,000 Euros that I need to deposit. Your money might, just, come in useful

TaoOfGimp said:

Money, me? I'm just about as broke as they come, that's why I'm asking if it's a good idea to withdraw 401K money or not.

psychodelicide said:

It depends. Usually if your money is tied to a 401K at yur old co. Best thing to do is to roll it over into an IRA or a new 401 at your present company (assuming you have one).

When I moved from Chicago to San Fran, I cashed mine out. I believe that the penalty & tax came to about 40 - 50% of what I had. Funny, I got much more than I was expecting.

You should also look into Borrowing against your 401K. SOme of these plans have that option...where you choose the amount and the rate of payback.