Question
Your best friend meets you for lunch and says, Hey! I finally stopped by Chase Bank and opened up my 401(k) account. I can't take
Your best friend meets you for lunch and says, "Hey! I finally stopped by Chase Bank and opened up my 401(k) account. I can't take the money out before 59 or else I'll get penalized. But it's all good because it gets matched up to 5% of what I contribute. And I need to let that money sit and grow anyway, so I'm cool with not touching it. They basically told me that I need this account because it's separate from any money I might get from the government through social security."
Why do you look at your best friend suspiciously?
401(k)'s are only matched up to 3%.
The 401(k) is an extension of social security money that the government gives; they are not separate.
The age you can start withdrawing money without penalty is not 59 .
You do not get penalized by withdrawing money from a 401(k).
The real reason is not listed.
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