What is the Penalty for Cashing Out My 401k?
December 20th, 2011
If you decide to make a withdrawal from your retirement account before you reach retirement age then you will be paying a hefty penalty. The 401k withdrawal penalty is ten percent of what you take out, and on top of that, you also have to pay taxes on your withdrawal. You can only do this when you’re at a transition point, like when you’ve just left your employer. If you go ahead and do this your former employer will hold twenty percent of what you withdraw for the penalty and taxes, and then when it comes time to do your taxes for the year you’ll have to pay whatever else you owe at that point.
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