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| $1,000 (10% early withdrawal penalty) | $448 (additional taxes paid when money is withdrawn at retirement) |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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