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Chapter 8. Using a 401(k) to Achieve You... > Sneaking Your 401(k) Past Uncle Sam - Pg. 82

Using a 401(k) to Achieve Your Other Financial Goals 82 Warning! Tax law changes enacted in 1997 and 2001 offer many new savings vehicles that you can dip into without a penalty tax. The new Roth IRA lets you take out your after-tax contributions without penalty or income tax. Section 529 plans and education savings accounts let you save for the kids' education. And new capital gains tax rates are as low as 18 percent (8 percent for savers in the 15 percent tax bracket). So before you leap into your 401(k) for money, check out all your options. The grass may be greener somewhere else. But first, remember Rule Number One of borrowing from a 401(k): Never take money out of your 401(k) for any reason other than why you put it in. This prudent advice means: If you are saving for retirement, you should never take out that money for any other reason than your retirement. If you want to use your 401(k) for a new house, a boat, a car, or the kids' education, you'll need to save more. As a result, you need to beef up your contribution level--maybe up to the max. Our Advice