RE: Do I cease all contributions to my 401(k) and take the money out?
How much do you pay in taxes for taking the money out before you reach age 59 1/2?
Too much. Most I can do now is stop putting in, but that’s on the assumption that it’s all going to come crashing down. If that doesn’t happen, then I’m out what I would’ve put in.
The amount pulled out is taxed at your regular income tax rate as it is considered part of that tax year’s income. On top of that, you will pay a 10% penalty on what you withdraw — so if your income tax rate ends up an effective 40% becuase of a couple of hundred large being added to your income and then the 10% penalty is added in, you get to keep half of what you pull out.