Need to Tap Your 401(k)?

Proceed with Care!

Everyone faces challenges, and some challenges require more cash than you have readily available. If you find yourself in that position, you might eye your 401(k) balance and consider using those funds to meet your present needs.

That’s a natural response, but it’s usually not a good idea.

Taxes and Lost Growth

If you are younger than age 59½, you generally cannot withdraw funds from your employer’s retirement plan while you are still employed, unless you qualify for a hardship distribution (explained later). If you are older than 59½, some plans may allow an in-service distribution.

Even if you are eligible, all distributions from a traditional 401(k) are subject to ordinary income tax, and a 10% federal income tax penalty generally applies to…

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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 20 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.

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