From: "LT" 
Newsgroups: misc.invest.financial-plan
Subject: Re: 401k match vs 10% penalty for early withdrawl
Date: Tue, 25 Jan 2005 16:49:52 CST
	iQBVAwUAQfbNEPl/I4+O31e5AQGrvAIAwbai5EWBIBVQP4pste4Od80F9rxYR00f
	tCNaH/uH7nOGmDLyzbW8zYZnMVW8VeqoRkRAnNrmImCEpmbnNgFtXQ==
	=kW8x

Don't pay the penalty.  If you need all the cash now, get a loan. Do the
72t, see this calculator.....
http://www.finance.cch.com/sohoApplets/Retire72T.asp
LT



 wrote in message
news:1106679814.678699.134090@z14g2000cwz.googlegroups.com...
> I may retire early and may need to tap one of my 401k accounts before
> 59 1/2.  I'm 50 and am trying to decide between continuing contributing
> to my 401k to get the 25% match knowing I may have to pay a 10% penalty
> vs. putting my savings into a taxable account.  Yes I know about the
> 72(t) option, but haven't investigated that yet.
>
> My employer matches my 401k contribution 25% for any size contribution.
> The vesting schedule is 20% after the first year of employment, 40%
> the next, etc, up to 100% after five years.  I'm 40% vested.  It seems
> likely I'll stay here long enough to make it to 60%, beyond that is
> uncertain, mostly due to forces beyond my control.
>
> My naive calculations show that if I leave after 60% vesting, I'll come
> out 3.5% ahead after paying the penalty, 8% after 80% vesting and 12.5%
> when fully vested.  These calculations assume no market change in the
> value of the account.
>
> I've got an estimated 5 years living expenses available in taxable
> accounts, so the penalty issue is not critical.  Because the investment
> selections available in the 401k ranges from bad to pure crap and the
> job future is murky at best I'm contributing 100% into a money market
> fund.  This particular 401k account is 4% of my total retirement
> accounts.  If I do retire early, the only income I'll be taxed on is
> earnings from the accounts containing 5 years of living expenses.
>
> I think I'm better off forgoing the match and investing in a taxable
> account.  What do ya'll think?
>
> Thanks
>



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