Withdrawing from your 401(k) - FOX 35 News Orlando

FOX 5 I-Team

Withdrawing from your 401(k)

Posted: Updated:
ATLANTA -

Since the 2008 market crash money experts over at Oxygen Financial say too many folks started dipping into their 401K to make ends meet. The Atlanta finance group says it's rarely a good idea.

The I-Team talked to local money experts who say that folks who dip into their 401K stand a good chance of being behind financially in retirement. That's a real issue. What you'll need to retire depends on the lifestyle you want to lead.

But here's a ballpark figure from the Financial Services group Transamerica Center -- Generation X will need the mid-range number of $1m in savings for retirement.

Yeah, the news get worse. Transamerica Center suspects that Baby Boomers will see a significant drop in living standards after retirement. Forty-one percent of them, as a matter of fact. Gen X is looking at 34 percent.

So what if you need cash? What do you do? Van Pappas, the VP of Atlanta's Oxygen Financial says no matter your bind, borrowing from your 401K should be your last resort.

"Ultimately, you don't want to go into debt, but you really need to look at your specific situation. You should consider borrowing or maybe 'I have a family member who is willing to help me out, so that I don't want to have to pull from that 401K'. Those would be a more ideal situation."

Know that if you still need to dip into your retirement savings you can. You can borrow from your 401K plan, but you have to pay that back in five years. If you leave that job, you'll have to repay it all at once. If you're taking it out without a plan to repay it, you will get hit with a 10 percent penalty. You'll leave that much of your money on the table when you walk away.

And finally, take this "Bloomberg News" data. It says that in 2011, the IRS collected $5.7 billion dollars in penalties from folks dipping into retirement funds. It's not just Gen Xers. We're all doing it. So, if you're tempted, talk to somebody first; maybe they'll have ideas about other options.

  • I-Team Story ArchiveMore>>

  • Credit Cards v Charge Cards

    Credit Cards v Charge Cards

    Wednesday, July 23 2014 7:48 AM EDT2014-07-23 11:48:23 GMT
    You always hear that it's a great idea to get rid of your credit cards, but sometimes it really is the best way to pay. So here's another option: charge cards.
    You always hear that it's a great idea to get rid of your credit cards, but sometimes it really is the best way to pay. So here's another option: charge cards.
  • FOX 5 I-Team Investigates

    Child traumatically injured in beach house elevator

    Child traumatically injured in beach house elevator

    Monday, July 21 2014 8:09 AM EDT2014-07-21 12:09:54 GMT
    Another child has been seriously injured in a residential elevator accident. This is a warning for any family renting a beach house.
    Another child has been seriously injured in a residential elevator accident. This is a warning for any family renting a beach house.
  • Governor reacts to Ethics allegations

    Governor reacts to Ethics allegations

    Friday, July 18 2014 6:40 PM EDT2014-07-18 22:40:07 GMT
    The Governor sat down with Senior Fox 5 I-Team Reporter Dale Russell for his first television interview following allegations of strong-arming by a member of his staff.
    The Governor sat down with Senior Fox 5 I-Team Reporter Dale Russell for his first television interview following allegations of strong-arming by a member of his staff.
  • Contact the FOX 5 I-Team

    * denotes required fields

    We're sorry, but only one entry is allowed per person.
    Thank you for your continued interest.

    Thanks for contacting FOX 5.  To reach our newsroom by phone, please call (404) 898-0100.

  • Good Day ArchiveMore>>

  • Back to School Jamboree with Hosea Feed The Hungry

    Back to School Jamboree with Hosea Feed The Hungry

    Hosea Feed the Hungry will host their annual Back to School Jamboree on Sunday, July 13, 2014 from 10:00 a.m. until 3:00 p.m. at Turner Field. Children will receive a backpack filled with school supplies.

    Hosea Feed the Hungry will host their annual Back to School Jamboree on Sunday, July 13, 2014 from 10:00 a.m. until 3:00 p.m. at Turner Field. Children will receive a backpack filled with school supplies.

  • 2014 Southern Living inspired home open for tours

    2014 Southern Living inspired home open for tours

    Wednesday, July 23 2014 9:37 AM EDT2014-07-23 13:37:06 GMT
    It's the first of its kind -- and if you're goal is to live a "perfectly Southern" lifestyle, it might be the home for you. The 2014 Southern Living Inspired Home is now open in Toccoa,
    It's the first of its kind -- and if you're goal is to live a "perfectly Southern" lifestyle, it might be the home for you. The 2014 Southern Living Inspired Home is now open in Toccoa, GA at Currahee Club.
  • Casting Call: July 23

    Casting Call: July 23

    Wednesday, July 23 2014 8:58 AM EDT2014-07-23 12:58:27 GMT
    Check out the Good Day Casting Call for the week of July 16.
    Check out the Good Day Casting Call for the week of July 16.
Powered by WorldNow

35 Skyline Drive
Lake Mary, FL 32746

Phone: (407) 644-3535
News Tips: (866) 55-FOX35

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices