{ "media_type": "text", "post_content": "Should I take out my 401k if I’m quitting and going back to school? I have been working for two years so there’s not much there lol", "post_id": "5ab26c0493590100187c9b96", "reply_count": 15, "vote_count": 1, "bowl_id": "564a5cdb94887803001dd07c", "bowl_name": "Accounting", "feed_type": "crowd" }

Should I take out my 401k if I’m quitting and going back to school? I have been working for two years so there’s not much there lol

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Definitely not

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Unless you have a sick family member who desperately needs money to be cured, do not take money out of your 401k.

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You have to pay taxes on it (20% withholding on the distribution) plus a 10% penalty. It’s better to leave it as is.

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Never ever take out 401k money.

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No.

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If you have a good 401k (ie, institutional class shares with low expense ratios and low fees and you like your investment options), then keep it in the 401k plan.

If you have a bad 401k - ie, one with high fees or limited investment options, then roll it into a personal retirement account. No taxes due if it's a direct transfer (they write the check to say, Vanguard).

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If you can entirely cover the cost of your education plus taxes on penalty distribution, then yes. Otherwise no.

Take the GMAt seriously and possibly get. A scholarship? Loans and 401k should be a last resort for school

No, waste of money. Unless you absolutely need it then whats the point

So should rollover to a different account or leave it with the company?

There’s an exemption from the penalty for qualifying education expenses. So if you use the money for school you don’t pay the 10% penalty.

But you lose the time value compounding of the 401k into the future. Research Albert Einstein and his view on the power of compoundingpharmacy😀

Thanks E4, Understand the value of compounding but wanted to comment on the points made earlier about the penalty.

If it’s less than 10k I believe they will make you take a distribution- be ready to roll it somewhere

I left my 401K in for nearly a year after quitting, it was fine it just kept growing with the market in there, Vanguard. I personally rolled it to a Roth IRA even though it was a (GASP!) taxable event. Lots of options for what to do with it.

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