Contributions and growth pre-dating your wedding are yours and yours alone.Therefore, if you're facing divorce and you take an early withdrawal, you face an additional problem besides the usual taxation and penalties.All taxes on 401(k) withdrawals are due in the year the withdrawals occurred.Lastly, withdrawing money from your 401(k) will cost you in terms of lost earnings on the money you withdrew from that 401(k).After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads. 10% distribution fee plus whatever your marginal tax rate is, plus whatever penalties your broker puts on you. That's why you wait until you retire to take distributions. Well I was speaking of say...I was laid off and couldn't find a job and had to resort to dipping into my retirement in order to keep things afloat. Obviously things would have to get real bad before that happened but it's just good information to know. "If you are laid off and need emergency funds but expect to be able to reattain your previous income, you could ask to borrow money from the 401k rather than liquidate.Somebody asked me the other day what the taxes would be like if they cashed out their 401k. So if you are making 0,000 a year and have to cash out your ,000 401k, you're a blithering.. The first year you might get reamed but in subsequent years your tax burden will be less than if you took a distribution during your peak years. Well I was speaking of say...I was laid off and couldn't find a job and had to resort to dipping into my retirement in order to keep things afloat. Obviously things would have to get real bad before that happened but it's just good information to know. There's no tax penalty for that if your employer allows it..401(k) retirement plans allow employees to save for retirement in a tax-deferred fashion.
And then it gets taxed at your tax rate, so it will cost you more than what you put in when you take it out early.
Yeah, worse thing you can do is withdraw your money early.
You wind up paying a early withdrawal fee, which is a percentage of what your taking out.
However, a Roth IRA (see below) offers special opportunities to escape taxes and penalties that aren’t available when you withdraw funds from a Traditional IRA.
Knowing all this, let’s look at the pros and cons of taking funds from your Roth—beyond staying out of the clutches of a bank or other lender.