Comments on: Your 401(k) Is Not a Cookie Jar! http://credit-blog.creditfyi.com/personal-finances/tough-financial-times-and-an-early-401k-withdrawal.html Fri, 03 Feb 2012 12:59:47 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Frankie28 http://credit-blog.creditfyi.com/personal-finances/tough-financial-times-and-an-early-401k-withdrawal.html/comment-page-1#comment-27 Frankie28 Wed, 29 Oct 2008 16:49:17 +0000 http://credit-blog.creditfyi.com/?p=44#comment-27 I agree that IRS regs will still sock you with taxes, even with Obama's lifting of the penalty. there are a lot of reasons which you've mentioned for NOT borrowing from your 401(k). But some people have nowhere else left to turn. A friend of mine was laid off a few months ago and decided to wing it with no health insurance while she was looking for another job. She just didn't want to pay for COBRA, over $500 a month. Unfortunately, she got appendicitis and had to have her appendix removed. With no health insurance, she had to pay over $20,000 out of pocket. the only way she could do it was to withdraw her 401(k). A tough break, but at least she was able to avoid hospital bills hanging over her head for years and years. It's up to people to educate themselves on the pros and cons and make a decision armed with all the facts. After all, it's their money and they should, ultimately, have access to it. I agree that IRS regs will still sock you with taxes, even with Obama’s lifting of the penalty. there are a lot of reasons which you’ve mentioned for NOT borrowing from your 401(k).

But some people have nowhere else left to turn. A friend of mine was laid off a few months ago and decided to wing it with no health insurance while she was looking for another job. She just didn’t want to pay for COBRA, over $500 a month.

Unfortunately, she got appendicitis and had to have her appendix removed. With no health insurance, she had to pay over $20,000 out of pocket. the only way she could do it was to withdraw her 401(k). A tough break, but at least she was able to avoid hospital bills hanging over her head for years and years.

It’s up to people to educate themselves on the pros and cons and make a decision armed with all the facts. After all, it’s their money and they should, ultimately, have access to it.

]]>