Withdrawing 401K money to help last year of med school

[blueridgenc]

Hi all.

I am finishing up 4th year of med school. I have a family of 4 with no income. I will get to my point.

Would it be wise to withdraw maybe 10-20K money from my 401k to help this last year of med school? Since I have no income, what are the tax and penalty implications?

Thank you for any suggestion!

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[7 Iron]

I would highly advise against withdrawing from a 401k. You'll pay normal income taxes on whatever you've taken out, plus an additional 10% penalty for early withdrawal. And of course you lose all that principal, investment gains and interest from your account that normally would be growing for you. Have you exhausted all your loans?

 

[EM_Rebuilder]

What he said...

Have you taken any loans out before? If you have zero loans and this is the only loan you take, then you are in the <5% bracket for med students.

If you have boatloads of loans already... I still do not think I would do it. The taxes and the lost investment probably does not outweigh what you will have to pay on the borrowed interest....