is it worth it?

[ggelitetrader000]

My employer contrbutes 50% match for every dollar up to 6% of my salary for 401k contributions. To maximize, I contribute exactly 6% of my salary to get maximize gain at 50%. More than 6% gain percentage starts to decrease, less than 6% gain amount starts to decrease.

With that, would it be good to withdraw same amount every year with 10% penalty?
The overal penalty would be 15% because for example:
600$ contributions + matching 50% is 900$.
Withdraw 900$ is 90$.
To get overal penalty based on my contribution only: 90 / 600 = 15%.
Overall gain is still 50-15=35%.

For simplicity, I am ignoring opportunity cost of tax free investing while in the 401k or APR gain if there is any.

 

[easymon1]

My employer contrbutes 50% match for every dollar up to 6% of my salary for 401k contributions. To maximize, I contribute exactly 6% of my salary to get maximize gain at 50%. More than 6% gain percentage starts to decrease, less than 6% gain amount starts to decrease.

With that, would it be good to withdraw same amount every year with 10% penalty?
The overal penalty would be 15% because for example:
600$ contributions + matching 50% is 900$.
Withdraw 900$ is 90$.
To get overal penalty based on my contribution only: 90 / 600 = 15%.
Overall gain is still 50-15=35%.

For simplicity, I am ignoring opportunity cost of tax free investing while in the 401k or APR gain if there is any.

Why do you want to withdraw funds?

Is it Worth It?
Missy Elliott answers the musical question..."Is it worth it, let me work it"

 

[ggelitetrader000]

good music, just wanted to keep money out of 401k.

 

[easymon1]

good music, just wanted to keep money out of 401k.

Heck, why not work it from within the 401k?

 

[taojaxx]

You like being taxed?

 

[tsznecki]

@ggelitetrader000 Unless you make 1M a year, this is just pocket change. Nice return, but still pocket change.

Nothing wrong with the return, I would just check if your employer is actually ok with you doing this. You may find yourself out of a job if they consider this an abuse of their matching program.

 

[newwurldmn]

good music, just wanted to keep money out of 401k.

Why?

 

[Scataphagos]

For simplicity, I am ignoring opportunity cost of tax free investing while in the 401k or APR gain if there is any

You shouldn't ignore... should be trying to maximize contribution and growth. At any point where you are no longer employed with current employer, you can roll your 401k into IRA and then have access to most all of the investment world. Tax deferral and compounding are worth a LOT!

 

[DaveV]

... Overall gain is still 50-15=35% ...

You are forgetting one thing - taxes. You will also be taxed on the the full amount of the withdrawal (not just the after penalty amount).

I strongly encourage you to leave the money in the 401K and let it grow, tax deferred, over the years. Also Google how to use your 401K as an emergency fund.

 

[R1234]

This does not answer your question but personally, I've maxed out my contributions to tax deferred accounts (SEP and HSA accounts) every year and will continue to do so. This is one of the few tax shelters the government provides us, and one should take full advantage of it.