401K assistance, please

Just so folks know, if you cash in a 401K early, the IRS takes 10 percent off the top, then you have to pay taxes on the rest but that bites you extra hard, too.

I don't know the breakdowns, but say you make $35,000 a year and get taxed at a 15 percent rate but you cash in a $45,000 401K and your income for the year suddenly is $80,000 so all your income is taxed at that rate. Not only are you taking the 401K hit, it's taking extra out of your regular earnings, too.

 

Yeah, to be fair, by the time I held back the 25 percent, I only got like a $7,200 check. So it wasn't that big of a deal.