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I think this an important thing to note - Pensions are great when they're good - but most were not that good. I do like the idea of a savings where I can contri
by Aloha 8y ago
I think this an important thing to note - Pensions are great when they're good - but most were not that good. I do like the idea of a savings where I can contribute money to, where some of it ends up being for retirement, and some of it ends up not being. My biggest issue with the 401k, is the money is locked in there, so if I honestly needed it, I'd be kinda screwed from a tax point of view.
- randomacct3847 8y agoWhy is your money locked? I think people make wayyy too much of the withdrawal penalty. Or assume that you can’t even touch it until you’re retired. It could be way higher. If you need the money 10% is not that bad...especially if you have an employer contribution.
- gafferongames 8y agoIt's 10% penalty, and then you have to pay tax on it because it's income (at least from a 401k). This is where it gets painful.
- randomacct3847 8y agoSo what? It’s pre-tax dollars so yes you pay income tax. You will have to do that when you withdraw in retirement too. If it’s for a emergency..like you lost your job then presumably you’d be in a lower income bracket for that year.
- Aloha 8y agoThe penalty is unreasonable - that's my primary objection.
- randomacct3847 8y ago10% is unreasonable? Are you saying there should be no penalty? I’m arguing it’s low. Every Californian (or anyone living in a state with high income tax) pays a 10% penalty just to live in that state. Put another way, withdrawing from a 401k in a state with no income tax would probably amount to the same amount of tax any Californian pays on their normal income.