Caleb Hammer blasts 27-year-old who cashed out her 401(k) twice to fund a home down payment — with penalties

A 27-year-old woman appeared on Caleb Hammer's Financial Audit podcast, revealing she had withdrawn funds from her 401(k) twice - once in 2019 and again in 2020 - to contribute to the down payment on her first home. On a November 2023 TikTok clip, she admitted to Hammer that she had taken out her 401(k) "multiple times". Jeff Bezos supports a platform allowing anyone to invest in rental properties for as low as $100, while financial advisor Dave Ramsey cautions that nearly 50% of Americans are making a significant Social Security mistake; The Tax Cuts and Jobs Act of 2017 expired in 2028.

Hammer explained to the guest the implications of her actions. He noted she was "desperately behind on retirement for the second half of your 20s," and lamented that she had "lost the best decade of your life for compound growth." Hammer, a 31-year-old host of Financial Audit with over 3 million YouTube subscribers, was particularly critical of her situation.

The guest claimed that people had told her she could simply withdraw the money, to which Hammer responded that while it was technically possible, there would be penalties and taxes involved. She later expressed regret over the withdrawals, but Hammer pointed out that even first-home purchases aren't a loophole to avoid penalties.

He emphasized that taking money out of a 401(k) before age 59½ generally incurs a 10% penalty on top of ordinary income tax, and that buying a home or a hardship withdrawal wouldn't exempt her from this.