So I'm 22, I have about $6,000 saved in my 401k, and I've come into some financial difficulties. I know it is suggested to not cash out until you're retired, so I have a few questions before I decide whether or not the decision is right for me.
- When you withdraw money from your 401k, will it show up on your taxes? I'm assuming you get taxed before they send the check.
- Besides setting back my retirement and having taxes taken out of my return, are there any further penalties to cashing out? Are you only able to withdraw once tax free? I'm assuming you can just start up another 401k, as each employer has their own policies.
Again I know it's suggested you don't cash out. I'm 22, I know this won't be as detrimental compared to cashing out at a later age. I just want to understand the process and the downsides before I go through with it.
Edit: Thank you all for your responses and suggestions. I have a huge decision to make. I'm going to try to get a 3rd job, it will be tough doing while in school but I'd like to avoid dipping into the 401k. I may talk with my HR regarding a 401k loan. I may also try to find a million dollars laying on the ground somewhere. If you still have any suggestions I'm open to them.
Submitted August 20, 2018 at 09:28AM by Cspookyman https://ift.tt/2Mx7JWP
