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Taking out an early 401k withdrawal can seem tempting, however it comes with a few big disadvantages. Here is some 401k information which help employees to see the consequences that come with taking out a withdrawal early.

The first way that taking out an early withdraw hurt you is by simply having less money in your account when you retire. By taking out $5,000 now you will have $5,000 less when you retire.

However there is another cost to look at. By taking money out now you lose the potential interest that you would have made off of those investments.

Getting out $1 today may mean that you lose $1 tomarrow, but it also means that you lose $3 or $4 in interest that that $1 would have made. Those might not seem like big numbers, but when you multiply it by thousands you can see exactly what I mean. Remember having the ability to save and wait are common characteristics of the wealthy.

The last disadvantage is that taking money out early is a sure way to get hit with all kinds of bills. The 401k withdrawal rules forces people who take money out from their account before they turn a ripe old age of 59 ½ to pay a 10% early withdrawal penalty. And that is in addition to all the taxes that they normally have to pay.

What this means is that by taking out money early a good chunk of that money will go to paying these bills. To cope with that you would have to take out even more money hurting your future even more.

Taking out money early is usually considered a bad idea. Unless it is an absolute emergency then the 401k should be left for retirement.