Everyone talks about how you should not pull out of your 401k because of how much you are losing over time. People also say if you absolutely have to go into your 401k, you should do a loan instead of a withdrawal.
Lets say I have a balance of 10k on Jan 1st 2023 and I do a loan for it all. I stop further contributions, and the loan is paid back by December 31 2023.
Let’s say I do a 401k withdrawal of 10k Jan 1st 2023 for it all. And by Dec 31 2023 I have got my balance back up to 10k.
How are these two scenarios any different?
I know of course you pay a 10% penalty on a withdrawal if you’re under 59 1/2 and you have to pay taxes on it.
I get that the withdrawal money is gone. But on a loan, the money doesn’t make any gains until it is paid back in full. And in these scenarios, since the money is back at the same time, how is it any different?
What I’m essentially trying to ask is this: If you do a 401k withdrawal, but re contribute what you withdrew quickly, does it really matter? Particularly on a small amount like 10-15k?
SECOND QUESTION: People also say “that 10k withdrawal will be worth 150k in about 30 years.”
So you mean to tell me if i have 10k in a 401k now, and I just leave it completely alone, and make no other contributions to it? it will turn into 150k?
Submitted September 25, 2023 at 11:32PM by Same_Row_5914 https://ift.tt/1D26rZG
