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If you withdraw money before you're
59 1/2, you will face some stiff penalties. To begin with, you will be taxed on the money
you withdraw. And many plans also impose some financial penalty on participants who make
early withdrawals.
This may become an issue if you change jobs
or just leave your current job. Many people in this situation choose to "roll
over" their 401(k) investments into an Individual Retirement Account or into their
new employer's 401(k) plan. By doing this, they avoid paying a penalty or tax.
You Have to Decide How to
Invest
It's up to you to decide how your 401(k)
money is to be invested. If you've never invested in stocks, bonds or mutual funds before,
you'll want to do your homework before investing your money. Wall Street 101 and The
Bear's Cave on this site are good places to start. Your plan administrator also most
likely has educational materials to help you make informed choices.
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