[Bill]

This calculator I found says my 401K will be worth 4 million when I retire at age 65

I'm 23, I put 12,000/year into my 401K... how does this add up to 4 million.. and if I retire how do I get the money?

[Steph]

it may not be exactly 4 million, but it will be more than you put in to it.

a lot of employers either contribute to employees' 401k accounts, or even match what you contribute.

also, interest will build over time.

when you decide to retire, you would just contact the company which your account is held through and ask for a payout.. as long as you are the required age when you ask for the pay out, you shouldn't be charged a penalty.

you can get the money at any time, as it is your money, but if you decide to take it out soon for any reason, they will charge a penalty fee.

[Precious]

http://en.wikipedia.org/wiki/401k

[corgi1922]

One correction to getting your money. As an active employee you may only have access to loans (no taxes or penalties because you are paying it back to yourself) and hardship distributions (taxes and penalty taxes). I wouldn't recommend ever taking your money out of your 401k prior to retirement (or rolling it over). The penalty taxes just aren't worth it.

If you are 59 1/2 years or older you are eligible for a 1x a year withdrawal. If taken out as cash you will only be taxed, no penalty. Once you term, regardless of your age, you are able to take the money as a cash distribuiton (taxes and penalty taxes) or roll over into another account.

Your employer should have someone you can talk to about the 401k. You can also look at the SPD for more information about your plan specifically. It's going to be a large document but don't let it scare you off.