Comments on: Changing Jobs? Leave the Cash in your 401(k) http://www.catchagideon.com/2007/04/27/changing-jobs-leave-the-cash-in-your-401k/ Successful Personal Finance Blog Fri, 25 Jul 2008 00:02:57 +0000 http://wordpress.org/?v=2.0.4 by: kosarit.com http://www.catchagideon.com/2007/04/27/changing-jobs-leave-the-cash-in-your-401k/#comment-7524 Fri, 27 Apr 2007 15:54:11 +0000 http://www.catchagideon.com/2007/04/27/changing-jobs-leave-the-cash-in-your-401k/#comment-7524 <strong>Changing Jobs? Leave the Cash in your 401(k)...</strong> A study in 2004 indicated that 45% of departing employees took a cash distribution from their 401(k) accounts, and 27% cash out completely. This is horrible news as cashing out your 401(k) takes a large penalty (10%) plus the lost investment potential ... Changing Jobs? Leave the Cash in your 401(k)…

A study in 2004 indicated that 45% of departing employees took a cash distribution from their 401(k) accounts, and 27% cash out completely. This is horrible news as cashing out your 401(k) takes a large penalty (10%) plus the lost investment potential …

]]> by: Willster http://www.catchagideon.com/2007/04/27/changing-jobs-leave-the-cash-in-your-401k/#comment-7471 Fri, 27 Apr 2007 09:51:34 +0000 http://www.catchagideon.com/2007/04/27/changing-jobs-leave-the-cash-in-your-401k/#comment-7471 Unfortunately I was one of those bright few that decided to withdraw money from their 401k upon leaving jobs. I certainly don't plan on making that mistake twice. What a lot of people don't realize, though, at least of the other people I knew doing this same thing, is that if you use that money towards paying off education costs you can get around the huge 10% early withdrawal tax. Even so, you have to ask yourself: Am I going to make a habit of cutting into my retirement savings any time my funds are in slim supply? Or would that money be better off left alone, compounding interest ever year? Unfortunately I was one of those bright few that decided to withdraw money from their 401k upon leaving jobs. I certainly don’t plan on making that mistake twice.

What a lot of people don’t realize, though, at least of the other people I knew doing this same thing, is that if you use that money towards paying off education costs you can get around the huge 10% early withdrawal tax.

Even so, you have to ask yourself: Am I going to make a habit of cutting into my retirement savings any time my funds are in slim supply? Or would that money be better off left alone, compounding interest ever year?

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