| What reasons are ok for early withdrawal from 401k |
|
|
|
|
|
Rtracy
New Poster
Cash: $ 0.45
Posts: 2
Joined: 12 Nov 2011
Location: Tennessee
|
| What reasons are ok for early withdrawal from 401k |
 |
|
We are trying to find out if we can withdraw early from our 401k, to cover a therapeutic wilderness program, for our 17 year old son, who is in a mental hospital right now. After this program, he will probably be going to a Therapeudic boarding school. We adopted him when he was 9 years old, and he needs some intensive therapy. My question is "is a therapeutic wilderness program considered a medical expense", as far as withdrawing early from our 401k and not being penalized.
Thanks for any advice.
|
Sat Nov 12, 2011 12:25 am |
|
|
oldguy
Senior Member
Cash: $ 309.10
Posts: 1480
Joined: 21 May 2006
Location: arizona
|
quote:
as far as withdrawing early from our 401k and not being penalized.
Even when you are allowed to take a hardship withdrawal from a 401k, you are still penalized. But the penalty isn't extreme, it is 10%. The income taxes are the bigger part of the cst for most people, the state and federal tax is often 30%. In that case your cost of withdrawal would be 40%. My point is - the cost would be 30% w/o the penalty or 40% with the penalty.
How about a loan from the 401k? But be careful - if you quit, retire, or are laid-off, the loan becomes due. So in most cases that is also not such as good choice.
In general, if you have other methods of borrowing availablel to you, they are probably better than the 401k.
|
|
Sat Nov 12, 2011 2:10 am |
|
|
SuccessBudget
New Member
Cash: $ 0.60
Posts: 3
Joined: 13 Nov 2011
Location: San Diego
|
I would make withdrawing from your 401K a last resort. Debt is generally bad, but if you are able to manage it, I would suggest a straight up loan.
Your 401K is your future. Don't touch it unless all else fails. Once you get in the habit of dipping into it, it's hard to stop.
btw...praying for you.
I talk about the philosophy behind financial success on my blog at SuccessBudget.com
|
|
Sun Nov 13, 2011 3:44 am |
|
|
Rtracy
New Poster
Cash: $ 0.45
Posts: 2
Joined: 12 Nov 2011
Location: Tennessee
|
Thanks for the advice. We will probably refinance. At least the rates are really low now. One more question....would it be possible to withdraw from a Roth IRA, with no penalty? We have a small amount in one, that could help out. Fortunately, my husband has had the 401K for 30 years now, and we really would not miss the Roth.
Thanks for the prayers. He's really a good kid....just trying to deal with issues from his past, and having a tough time. Hopefully, time and therapy will help.
|
|
Sun Nov 13, 2011 4:16 am |
|
|
|
