Josh Martin wrote:
- quote -

I can't help you with the formula, but I would like to
propose another factor -- many companies with a 401(k) plan
also allow after-tax contributions. If you make after-tax
contributions, the compnay often still matches it, and
after-tax contributions are subject to less severe penalties
on early withdrawal.

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- quote -

If you can get 50% increase in the basis without even
investing... why would you question this? The taxes and
penalty may touch 50%, or may not, I would bet on you still
coming out ahead.

Helen, EA in PA
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004
Donate on-line at www.msandyou.org

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I am 28 years old and have a OK amount of money in my 401K.
I understand the tremendous benefit 401k plans offer, but am
stuck with a question because I don't know all of the
required variables.

If I know I'll need access to my money in 10 years, is it
better to continue putting money in the 401k and take the
penalty (working capital for a small business - not exempt
from the penalty), or is it better to not put the money in
the 401k in the first place?

Some numbers to work with - my company matches up to $2200
per year, and I could contribute $4400 per year. I'm in the
25% tax bracket. Essentially, I'm just looking for the right
formula to figure out the answer (stop contributing now, or
contribute and take the penalty later).

Thank you,
Josh

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