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What's the penalty if you take money out a 401K?
My friend was trying to borrow money from me again today...I got angry and reminded him about his 401K account..he says he can't take the money out because he'll get a penalty. What would happen if he were to take a $1000 out?
3 Answers
- MoneyMenLv 710 years agoFavorite Answer
He'd pay taxes on it plus a 10% penalty.
However, most 401k plans allow a participant to take a loan from their plan without any tax/penalty -- he just has to pay it back to his own plan.
So tell him to go take a LOAN out of his 401k.
And if he doesn't want to do that, find a new friend. Only dirtbags harass their friends for money.
- ?Lv 710 years ago
20% Federal Taxes withheld. Come April he also owes a 10% penalty and State taxes. Thus that 1000 is down to 600
