4 thoughts on “Debt Free With an Early 401k Withdrawal.

  1. Barring catastrophic events, there is no reason to pull money from a tax advantaged account to pay off debt, IMO. The numbers would never justify this decision. You make some excellent points about both penalties and tax implications, which would likely lead most ppl to the don’t raid your retirement conclusion. I think that most people can find a way to change circumstances (e.g., living costs, spending) rather than raid retirement funds, but clearly there are always exceptions. My main concern is that ppl may see this as a strategy to pay debt over and over and end up with no long term savings, rather than deal with the issues causing the problem, which are often addressable. Great post!

    1. Thanks for stopping by! I agree. I think people tend to view retirement as this fictional place, and the money set aside for it doesn’t feel real. So, they use the money and suffer later…

  2. I’ll admit I once considered withdrawing from my 401k. It was only a small amount (like $2000) but the idea of feeling the burn around tax season was enough for me to say nope!

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