What is the downside of a 401k?

Answer by  salsafoodie (3146)

One of the main downsize of a 401K is that if you want to take out your money early you will have to pay penalty and any other taxes that are accumulated during the years when you have your 401K. This in turn will make you lose up to 50% of your money.

Answer by  TMATM (499)

The ability to borrow money from the 401K account before retirement is a big disadvantage because it has to be repaid, often with severe penalties.

Answer by  kimber18 (514)

The only thing I can think of at the moment, is loss due to the stock market. I know of people who have lost tons of money in their 401k due to the Stock Market.

Answer by  lizzy31 (43)

For those people who are not savvy with the stock market - who blindly allow investment brokers affiliated with the corporation for whom they work - to invest in a volatile market that holds much risk to one's savings and retirement plan is frightening. Outside of the intimidation factor, there is also the inability to access your funds when needed.

Answer by  eaglover (394)

No savings plan is perfect but one disadvantage is the ability to borrow from the account. Taking money out can be as expensive as any loan and must be paid back with after yax money and in addition to the interest, plus possibly severe penalties and forfeiture of your 401K