The Feds Want Your Retirement Accounts

[EvilElmo]

This. I did the math and with 5.5 years of contributions with a decent company match, if I pulled it out now my penalties would be almost equal to the company match + gains. Essentially it would have been a large 0 interest savings account. What a mess.

True, that does suck. But it doesn't suck as much as having it all moved into new government controlled accounts for your benefit. We've seen how well they've run Social Security...

 

[Liberty1911]

You have to pay the 15% "penalty", plus have the amount to your taxable income at the end of the year. I'm no financial whiz but I think that pretty much wipes out your matching contributions! As always the working guy gets the shaft no matter what he does.

It's a 10% penalty unless they raised it this year. I disagree that it's not worth it, even if you early withdraw.

Most companies match 50% to 100%. Let's assume 50% and let's assume your tax bracket is 20%. We'll also assume the stock market remains the same and doesn't affect the balance.

So, if you have 10k of income, you'll pay 20% income tax, leaving you with 8k

If you put the 10k in a 401k, the company matches with 5k, so now you have 15k.

You early withdraw and they hit you with a 10% penalty and 20% tax. 15k - 30% equals 10.5k.

So, you'd have 10.5k instead of 8k. Sounds like a better deal to me.