[sokoloff]

How does putting in $100, getting a $7 match, and immediately pulling it out and paying a $10.70 penalty on the withdrawal leave her with more disposable income? (She avoids income tax on the $100, but then pays tax on the withdrawal so if they happen in the same year, that’s also a wash.)

I literally can’t see how this tactic helps her in any way.

[jumbopapa]

It's a dollar for dollar match on up to 7% of pay. Let's say she makes $100. She puts in $7 and her employer also puts in $7. That's $14, and upon early withdraw she would pay $1.40 (penalty) + income tax (likely $0). She would come out with an additional $5.60.

[sokoloff]

Additional note: Only plan participants 59.5 or older are eligible to make in-service withdrawals (as are terminated employees, of course). Probably not a viable income augmentation plan for most.

https://www.sec.gov/Archives/edgar/data/63908/00011931251820...

[jumbopapa]

Then I will concede that this option won't work in her case. Doesn't change that education is one of the best choices that she has.