Reply to Reducing 401(k) contribution -- s/o

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[quote=Anonymous]Thanks all.  The thing is, when I run the numbers I come out several thousand dollars ahead by making a withdrawal now vs. just stopping contributions.

So for example, last year I put in 10,000.  I've achieved a 19% return this year, and got a company match worth 2250.  So that's a total of about $14,250 = that's a year's worth of contribution and gain.  If I take that year's worth out, subtract a 10% penalty and 28% taxes, I end up with about $9500 cash in hand.  My 401K balance goes down $14250 but in the following year makes that back, as my contributions and company match continue.

If I stop contributions, that's 10K minus 28% tax, so I will have a little over $7000 case in hand.  Plus there's interest over the course of the year that I will be paying on my debt (since I don't get the benefit of more money all at once).  And I lose out on the 2250 company match plus whatever that money would have made in the 401K.

The big difference is the 10% penalty but that is more than made up for by the company match in the coming year.

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