John is 35 and wants to take a hardship withdrawal from his plan account to pay for graduate school.
|The Real Cost of Taking a Withdrawal From Your 401(k)||The Real Cost of Taking a Loan From Your 401(k)|
|$10,000 (actual withdrawal amount)||$10,000 (original loan)|
|$2,000 (20% federal tax withholding)||$1,600 (interest paid with after-tax dollars)|
|$1,000 (10% early withdrawal penalty)||$448 (additional taxes paid when money is withdrawn at retirement)|
|$7,000 (total available for tuition)||$12,048 (total cost of loan)|
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