The Street | Oct 6th, 2020
If you're considering cashing out or taking a loan on your 401(k), here's a few things to know about the possible impacts on your taxes of an early withdrawal.
If you need money but are trying to avoid high-interest credit cards or loans, an early withdrawal from your 401(k) plan is a possibility. However, before you consider this option, be forewarned that there are often tax consequences for doing so.
If you understand the impact it will have on your finances and would like to continue with an early withdrawal, there are two ways to go about it — cashing out or taking a loan. But how do you know which is right for you? And what are the tax consequences you should be expecting?