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Mother effer....got robbed

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rcpratt said:
401k withdrawals are subject to a 10% penalty beyond being pre-tax dollars.

An alternative is to take a loan from your 401k, up to half of the balance. That will hurt your long-term savings, though.
Click to expand...

You've missed my point - instead of putting $1000 into a savings account (that earns 1% interest), if you haven't already maxed out your 401k, why not stick the extra $1000 into the 401k. Actually, though, since they're pre-tax dollars, you're sticking $1100 into the 401k and still having the same amount of take-home income. When you need the cash, I'm not saying to withdraw half of your 401k; of course that would have a negative impact on your retirement interest. I'm suggesting that you withdraw that extra $1000 that you wouldn't have otherwise put in there. Actually, you end up with more in there than you would have put into the bank, since they are pre-tax dollars. Provided you pay the money back, you don't pay a penalty. You have to pay interest, but you're paying interest to yourself. Unless it's the case that you would have taken the $1000 out of your savings account and never saved another penny, then it seems you would be paying back that "loan" to yourself.
 
Fucker...you got me for a minute...it felt like a parody, but I just couldn't figure out...ah shit...who has been bragging about $1000...NOW it makes sense.

:thumbsup:
Nicely played.
 
DrPizza said:
You've missed my point - instead of putting $1000 into a savings account (that earns 1% interest), if you haven't already maxed out your 401k, why not stick the extra $1000 into the 401k. Actually, though, since they're pre-tax dollars, you're sticking $1100 into the 401k and still having the same amount of take-home income. When you need the cash, I'm not saying to withdraw half of your 401k; of course that would have a negative impact on your retirement interest. I'm suggesting that you withdraw that extra $1000 that you wouldn't have otherwise put in there. Actually, you end up with more in there than you would have put into the bank, since they are pre-tax dollars. Provided you pay the money back, you don't pay a penalty. You have to pay interest, but you're paying interest to yourself. Unless it's the case that you would have taken the $1000 out of your savings account and never saved another penny, then it seems you would be paying back that "loan" to yourself.
Click to expand...

People ignore good options if they're complicated.
 
DrPizza said:
You've missed my point - instead of putting $1000 into a savings account (that earns 1% interest), if you haven't already maxed out your 401k, why not stick the extra $1000 into the 401k. Actually, though, since they're pre-tax dollars, you're sticking $1100 into the 401k and still having the same amount of take-home income. When you need the cash, I'm not saying to withdraw half of your 401k; of course that would have a negative impact on your retirement interest. I'm suggesting that you withdraw that extra $1000 that you wouldn't have otherwise put in there. Actually, you end up with more in there than you would have put into the bank, since they are pre-tax dollars. Provided you pay the money back, you don't pay a penalty. You have to pay interest, but you're paying interest to yourself. Unless it's the case that you would have taken the $1000 out of your savings account and never saved another penny, then it seems you would be paying back that "loan" to yourself.
Click to expand...
But that $1000 that you put in the 401k would still be, essentially, untouchable until you retire. Yes, you can borrow it, but you must always pay it back to the 401k. I guess it depends on what (and when) you were planning on using that savings account money for in the first place.

Depending on the difference between your 401k return and savings account return, it wouldn't be a terrible idea just to withdraw it, anyways. If your 401k was 5% and savings 1%, you could net a profit on money withdrawn from the 401k after less than 3 years, even after the 10% penalty.
 
Robbed... $1000... 12 year old girl... had TridenT written all over this parody without even reading the source material.
 
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