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FOX 5 I-Team

Withdrawing from your 401(k)

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ATLANTA -

Since the 2008 market crash money experts over at Oxygen Financial say too many folks started dipping into their 401K to make ends meet. The Atlanta finance group says it's rarely a good idea.

The I-Team talked to local money experts who say that folks who dip into their 401K stand a good chance of being behind financially in retirement. That's a real issue. What you'll need to retire depends on the lifestyle you want to lead.

But here's a ballpark figure from the Financial Services group Transamerica Center -- Generation X will need the mid-range number of $1m in savings for retirement.

Yeah, the news get worse. Transamerica Center suspects that Baby Boomers will see a significant drop in living standards after retirement. Forty-one percent of them, as a matter of fact. Gen X is looking at 34 percent.

So what if you need cash? What do you do? Van Pappas, the VP of Atlanta's Oxygen Financial says no matter your bind, borrowing from your 401K should be your last resort.

"Ultimately, you don't want to go into debt, but you really need to look at your specific situation. You should consider borrowing or maybe 'I have a family member who is willing to help me out, so that I don't want to have to pull from that 401K'. Those would be a more ideal situation."

Know that if you still need to dip into your retirement savings you can. You can borrow from your 401K plan, but you have to pay that back in five years. If you leave that job, you'll have to repay it all at once. If you're taking it out without a plan to repay it, you will get hit with a 10 percent penalty. You'll leave that much of your money on the table when you walk away.

And finally, take this "Bloomberg News" data. It says that in 2011, the IRS collected $5.7 billion dollars in penalties from folks dipping into retirement funds. It's not just Gen Xers. We're all doing it. So, if you're tempted, talk to somebody first; maybe they'll have ideas about other options.

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