can you take out money anytime from your 401k?

Question

im behind on my bills and thinking of dipping into it. is it possible to take money out?

Answer 1

not unless you can show extreme hardship and even then it is difficult plus if you do manage to get any money out you will have to pay taxes on it plus penalties. Mt advice is to look for another way to get money.

Answer 2

It may depend upon your plan, but most 401K plans allow you to take out a loan against your 401k balance. You pay yourself back at a specified interest rate (about 5-7%). Before you can leave your job, you will also need to pay back the loan, so it's somewhat dangerous if you're planning to change jobs anytime soon. Also, while your money is missing from your acount, it's not avaliable for investing.

I took out a 401k loan for a down payment on my house and it worked great. It's usually okay to use it for investments like a house or education, but I wouldn't use it for paying off bills. Frankly, I would change my spending habits, cut back and pay the bills in this order:

1. Rent/Mortgage
2. Gas/Electric
3. High interest credit
4. Other interest bearing accounts
5. Anything else with a due date
6. Delay most anything else without a due date.

(If you use your 401k, I'll bet you'll be back in debt within a year.)

Answer 3

it is possible to take money out, however DO NOT DO THIS. you will be taxed on it, and only get about half of what it is worth if you do. You can borrow against it, but you will need to talk to your financial advisor or 401k host in order to do this. The money that goes into your 401K is pre-taxed which means that it goes into your account and is not taxed. It has big financial penalties if you do take from it. I would say that if you have a big emergency, then consider it, otherwise, just think of it as untouchable funds until you retire.

Answer 4

It depends on your plan - check with your employer. Some plans permit withdrawals under certain circumstances.

If you take money out and aren't age 59-1/2 at least, you'll pay a 10% penalty to the IRS on the amount you take out. And in any case you'll have to pay income tax on the amount you take out.

A better option might be to borrow against the money you have in the plan. Then you won't pay a penalty or current taxes as long as you pay it back on schedule.

Answer 5

I wouldn't touch your 401k money if I were you. You will be penalized at tax time. I would try eliminating things from your budget....any little thing would help. I got rid of my cell phone.

Answer 6

Not without getting taxed on it and sometimes you will get penalized for taking money out before it is time.