Financial Intel Monthly

Cash Out Your 401(k)

Jun 20, 2020 8:15:00 AM / by The Retirement Group

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Many people choose to cash out their 401(k) plan when they leave their employer. It’s easy to see why this is tempting. Many people view that 401(k) plan balance as “bonus” money. They use it to pay bills, buy something special or simply boost their savings account.

"Many people view that 401(k) plan balance as “bonus” money."

Despite the temptation, cashing out a 401(k) isn’t wise, especially if under age 59 1/2 . First, taxes must be paid on the amount withdrawn. Second, if under age 59 1/2, there’s a ten percent withdrawal penalty on top of taxes.

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The combined taxes and penalties may use up a big portion of the
401(k) balance. You can avoid this by moving the money into a qualified vehicle.

 

For more information about this topic, view our e-book here: https://retirekit.theretirementgroup.com/401k-rollover-strategies-ebook-offer


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