Raid the 401(k)?

[Detente]

My first thread here. Apologies if this has been addressed elsewhere. My question is whether anyone has or has considered simply liquidating funds in tax-advantaged retirement accounts, accepting the penalties and tax hits (maybe a total of 50%?). Would you do so if it would immediately put you over the top to financial independence? I'm not seriously considering this, except in a possible doomsday scenario if I get fired or feel I need to quit my job. I'm familiar with ways to access retirement funds gradually penalty-free, but just wondering what people think about just pulling money out for immediate use.

[Dragline]

No. But I would look into some of the loopholes if I was seriously considering it:

http://www.forbes.com/sites/investor/20 ... t-penalty/

[George the original one]

I've known one person who yanked his 401k money to pay off his family's house. His wife had cancer(*) and I think he was just being preemptive about medical debts, but his timing was fantastic as that was right before the market crash of 2008.

(*) His wife survived cancer, though it was a close call.

[dot_com_vet]

I would avoid it, and only disperse it in small increments if I did. You might as well let it grow tax free / deferred as much as possible.

[IlliniDave]

When I was younger I thought through a scenario of doing that at some point in the future, but it didn't stick, so I can't say I thought about it seriously. My thought was to get in a MM at 4% and be able to live off the interest. Of course that was before 2008/2009. It was quickly apparent that the up-front hit would be too big to overcome unless I worked until retirement age anyway.

[Detente]

Thanks for the replies, all, and link, Dragline. Seems like something to avoid at all costs, except in the case of a true emergency (one that the withdrawal rules don't already allow an exception for).