Do not dip into your retirement account
You should avoid withdrawing money from your 401(k) account — even if you are cash-strapped — for two reasons. First, if you have not reached the age of 59½ you will have to pay a 10% penalty on the amount you withdraw.
Secondly, and more importantly, early withdrawals disrupt the compounding interest effect and reduce your overall earnings by a significant extent. You can put the money in your 401(k) account to good use by transferring it to a rollover IRA instead.
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