How can you draw money out of a 401k without huge penalty's?

Question

I have had it for seven years. I realize I need to wait until next year because my income this year is high. But I am thinking about taking some time off next year and my income will be a lot lower.Give me some great tips. My son is colledge so I know I can use some for that.

Answer 1

Covert your 401k into an Immediate Annuity with a Life option and receive monthly income for life. This will avoid the 10% penalty. Only do this if you are your 50 or older.

Take out Student Loans for college tuition and you make the payments for you son. Then maybe in the future when he matures and is making a ton of $$$ you son will volunteer to take over the payments for you.

Answer 2

Thankfully, while he was president, Clinton passed legislation to ease restrictions on early withdrawals from 401K funds. There will be no penalties for early withdrawal if the money is used for:

1. Educational expenses.
2. Medical bills and other medically related expenses.
3. Money used to purchase a first time home (i.e. you are exempt if you are a first time home owner but not for any subsequent home purchases).