I want to close my 401k account and use the money to start a bussiness.What should I do? -

The other people here are correct - unless you are over age 59 1/2, your retirement savings (401k or IRA) should not be tapped except in extreme emergencies.The reason is twofold - first, as others have mentioned, you will get killed by taxes and penalties (to which you would probably forfeit about half of the balance). Second, whether or not your business succeeds, you WILL want to retire someday...or at least have that nest egg so that you don t HAVE to work (even if you choose to).There are many other - and better - ways to fund a small business. Look into an SBA loan (see link below), or even think about taking on some investors to share ownership in your venture.You don t want to risk your retirement.I hope that helps. Good luck!http://www.sba.gov/financialassistance/

If you are under age 60, do not do this. The reason is that you will pay taxes and penalties on the withdrawal that will be at least 40%, if not 50% of the balance. That money is due and payable to the IRS and at least 20% will be withheld from your check (the rest of the tax/penalty you will pay when you file your taxes in the spring).Plus, you may be in a situation at your job where your account balance is not yet fully vested - meaning if you take it out, you lose the unvested part. Find out the answer to that question before you even consider taking money out.So, if you think you have $20,000, but some of it is not vested and a big chunk will be taken for taxes, you may only end up with $8,000 - $10,000. The pain is not worth it.Another thing to consider is that if your business fails and you need to file bankruptcy, the money you took out of your 401k to start this business will be gone, where if you leave it in a 401k it is protected.What I would do instead is get financing from a bank or keep your day job for a while and save up your start up costs for your business. One thing you could do to increase your savings for this purpose is to scale back your 401k contributions to just the amount to get the maximum company match.

You may use the funds maintaining the 401 k and borrowing against it.postpones the tax on this for later. $ saving

Re-think your plans.See if you can get a loan against the 401K funds rather than closing the account.

You re looking at loosing a huge portion of it due to penalties. I would strongly advise NOT doing that.