Don’t Just Retire Cash Rich, Retire Wealthy

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$1,000 (10% early withdrawal penalty) $448 (additional taxes paid when money is withdrawn at retirement)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