Early Withdrawal

Question: Company’s matching 100% 401K contrib. If I withdraw money immediately with penalty, that’s still good deal?

What kind of penalty for early 401K withdrawal ?
Please keep in mind that I consider using company’s matching to cover the penalty. For example, I contribute $100 to 401K. With company’s matching, it is $200. If I withraw this $200 immediately, I pay 30% penalty and I pay 30% income tax. That leaves me $98. That is still better than paying 30% income tax on the original $100 income. That would leave me $70. Thanks for your help in advance.

Answer: In most company, 401k matching is not 100% vested immediately and thus the plan wouldn’t work.

To do a more accurate calculation you need to gather more data. There are a couple of things you need to find out from your plan administrator
1. What is the maximum amount that the company would match?
2. What is the vesting schedule?

As far as tax issues:
Early withdraw from 401k is taxed as ordinary income (i.e. your marginal tax rate), plus 10% early withdraw penalty.

Best wishes.

395 Dealing With 401k Early Withdraw. Part 1