Prepare for the Future, Keep Your 401(k)!
You're thinking, what 401(k)? Well, if you don't have a current 401(k) you will have one when you land your first job after graduation, or at least lets hope you do! Anyways, I read an interesting article about what many people are doing when they switch from one job to the next, they are cashing out their 401(k)s! The article mentioned that this type of action is common among employees in their twenties and early thirties, but now there is a large majority of individuals in their forties who are cashing out their 401(k)s! Are they stupid? If someone decides to cash out a 401(k) before they are 59.5 years old they will be required to pay a 10% penalty payment to Uncle Sam and a large amount of taxes due on pretax contributions. Try to swallow this, there is a good chance that the person who cashs out their 401(k) will end up losing up to 35% right off the top of whatever he or she has in the plan! No matter how small or how large your 401(k) is, no matter if you are 25 or 45, don't be tempted by the quick cash of cashing out. If you can fight the temptation, you'll have so much more money when the fun part of life comes... retirement!
Posted by Logan at 10/06/2005 03:51:00 PM