Clark Howard, the other day on Hannity, gave some interesting advice.
Move/change your qualified (401, 403, IRA) money to non-qualified securities. Take the 10% penalty, but DO NOT SELL your securities (or sell and rebuy, I guess, does the same). You’ll take a 10% tax penalty at the bottom of the market, keep the stocks, then you’ll have full control of them as the market recovers.
Interesting.
That makes no sense whatsoever. You’re paying taxes on the FULL amount you take out, PLUS the 10% penalty.
An employee can not take money out of his 401k as long as he is employeed with the company. He has to quit, be fired, or leave the company in some fashion.
Only exceptions are loans, and hardship withdrawals. The situation outlined in the original post won’t qualify for hardship.
If the original poster leaves the comapny for ANY reson, the total amount of the loan, including interest accrued will be considered income in the year he leaves, and may also trigger a 10% penalty if he is less than 591/2.