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Is There Still A Penalty Assessed When Cashing Out Your 401k If You Are Using It To Pay Off Student Loans?

This entry was posted on Tuesday, February 9th, 2010 at 12:14 pm and is filed under Pensions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Is There Still A Penalty Assessed When Cashing Out Your 401k If You Are Using It To Pay Off Student Loans?”

  1. I’m not a financial advisor, so you should check on this, but I believe that you will pay early withdrawal penalties plus income taxes at your current base rate on whatever you take out for whatever reason before you are 59 1/2.
    You can take a loan against it, but you’ll have to pay that back. I think you can also divide the entire value by how many years you likely have left to live (from actuarial tables) and take annual “substantially equal payments” without penalty. All in all, very, very bad idea to use 401(k) money before you are at least 59 1/2.
    Check the Motley Fool for sound advice on paying off your loans.

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