When can i take out some money from my 401k?

Question

My friend is taking a trip to Europe, and he wants to take out money out of his 401k, how does he do this?

Answer 1

Okay depending on his age and amount of money there could be a loop hole. There is something called a 72t account. According to the IRS a person may take equal payments per year out of their 401k or IRA for a minimum of five years or until they reach age 59 1/2. This will eliminate the 10% penalty. so example #1 if you are 51 you have to take equal yearly payments out until you reach 59 1/2 but if you are 57 you have to take equal yearly payments out until you are 63 years of age. But if you run out of money before the time expires then you will have to pay the 10% penalty on the monies you took. I would not advise any of these methods unless you have a pension plan.

Answer 2

As others have said, that's really stupid.

But I wanted to add that if he is still employed at the company, he probably can't. They normally only let you take the money when you leave the company.

Answer 3

Find the contact person for who he has it invested with. Beware!! I think there is a very big penalty for withdrawing out of it early. I think it is like 40%. But it can be done.You can usually have your money right away though.

Answer 4

Your friend's an idiot.  Don't copy him.

Taking money out of a 401k to pay for a vacation is financially about as stupid as throwing money out the window.  In fact, it's worse, because you have to fill out more paperwork.