Finance & Investment Tips : Penalty for Cashing in a 401k Early

Updated : Nov 11, 2019 in Articles

Finance & Investment Tips : Penalty for Cashing in a 401k Early

This is Patrick Munro discussing what is the
penalty for cashing in a 401K early. A 401k is a governmental retirement program designed
to allow working employees to put away money for retirement and not pay any taxes on the
growth of that money. It’s a privilege to have a 401k, the government grants you the
privilege and if you don’t have to pay taxes on the money, it will grow even quicker. However
some individuals have, basically have problems with their cash flow and they have to collapse
their investment. And if they do so before the age of fifty nine and a half, the government
then will give you a penalty upon your money for the withdrawal. It’s based on your taxable
rate as well as a pure ten percent penalty over and above what you take out. So it’s
a very large penalty and definitely not want to tap your 401k as an emergency cash resource,
because it will not only put your retirement funds back but it will actually cause you
to lose money. So that’s very important as to make sure you build money for your retirement
future. This is financial adviser Patrick Munro talking about the penalties of withdrawing
your money from a 401k early.

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