Using 401 (k) For School?

Topic 17142 | Page 1

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Jeremy, Natural Newbie's Comment
member avatar

I may have a 401 (k) from an old job that I have not used or even looked into. Currently right now I would love to tap into it to pay for a CDL school, since my current job I am not making enough to even pay into retirement I understand it's very dumb to do, yet I am not even 30 yet and I think if I did get hired with my CDL I could pay back into quickly.

Has anyone ever pulled from there 401 (k) for "hardship"? It says I can use it for tuition at a 30% cost basically

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.
Errol V.'s Comment
member avatar

It's not necessary to be hit with withdrawal penalties. There are too many good companies that will cover your tuition in return for a year working for them. Check these links out:

Paid CDL Training Programs

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Tim F.'s Comment
member avatar

I agree with Errol V. Here..to many companies offer you a free opportunity to get your CDL. The only thing they will ask is that you work for them for a year, which at your age, is NOT an eternity..lol. You are not a slave of the company as others have described it. You do not indicate where in the country you live, that could limit your opportunity. But, look into company sponsored training , get going with said company. Then I would look at rolling that old 401k into your current companies 401k program. Good luck.

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.

Company Sponsored Training:

A Company-Sponsored Training Program is a school that is owned and operated by a trucking company.

The schooling often requires little or no money up front. Instead of paying up-front tuition you will sign an agreement to work for the company for a specified amount of time after graduation, usually around a year, at a slightly lower rate of pay in order to pay for the training.

If you choose to quit working for the company before your year is up, they will normally require you to pay back a prorated amount of money for the schooling. The amount you pay back will be comparable to what you would have paid if you went to an independently owned school.

Company-sponsored training can be an excellent way to get your career underway if you can't afford the tuition up front for private schooling.

John L.'s Comment
member avatar

As Tim and Errol said above, plus you don't ever want to pay 30% interest to borrow your own money.

Even if you don't want to commit to a company sponsored program, you can get grants and student loans and attend a private school or a program sponsored by your local community collage or vocational school.

If you are prior military - from any era - there are additional funds available to you, not to mention your GI bill benefits.

Many of my classmates at Tidewater Community College's Truck Driver Training Program are on a full ride for tuition.

Deb R.'s Comment
member avatar

I did withdraw money from my IRA for school, because it made sense for me to do so. I was able to attend a reasonably priced technical college with a great program, and then had much more flexibility choosing a company (I went with H.O.Wolding). If it's from an old job, your 401k may have been converted into an IRA. The rules are different for withdrawing money for education, the 401k will have a 10% early withdrawl penalty, the IRA may not if the school qualifies and you must be at least a half time student. You WILL have to pay income tax on withdrawls, that will vary with your tax bracket. For instance, in 2016, filing single earning $9,275 to $37,650 would put you in the 15% bracket. Also, consider that many companies offer tuition reimbursement, so if you are disciplined, you may be able to repay a loan from your 401k. If you do not get reimbursed, remember to claim the education credit on your income taxes.

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Rick S.'s Comment
member avatar

Agree with Tim/Errol.

Why tap it and potentially pay out a penalty, unless there are no other options for school. Fortunately - there are PLENTY OF OPTIONS.

Paying for school actually does qualify as a "hardship withdrawal" though, under IRS rules.

IRS Rules for Hardship Distributions

Tuition, related educational fees and room and board expenses for the next 12 months of postsecondary education for the employee or the employee’s spouse, children, dependents or beneficiary.

Also:

Hardship distributions are subject to income taxes (unless they consist of Roth contributions). They may also be subject to a 10% additional tax on early distributions. Employees who take a hardship distribution can't: repay it to the plan, or roll it over to another plan or an IRA.

Something to think about.

Also something to think about is that most private schools (except for County/State College/VoTech courses) are PRETTY EXPENSIVE - we've seen people talk about $4K - $8K for a 3 week course that JUST SATISFIES the 160 hour requirement, and basically gives you just enough to pass a CDL exam to get your license. And is NO GUARANTEE that you will get a job out of any particular school (despite what is touted as a "guaranteed placement" or their advertised placement statistics).

Rick

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.
Deb R.'s Comment
member avatar

Tech college I went to cost $2500 for a full time 10 week course.

John L.'s Comment
member avatar

And is NO GUARANTEE that you will get a job out of any particular school (despite what is touted as a "guaranteed placement" or their advertised placement statistics

The private (for profit) schools that I visited touted their job placement services (one even offered free lifetime job placement for their graduates) as one of the reasons for their high tuition. My response to job placement assistance in this field is this:

Most trucking companies will hire you as long as you have no recent felony, DUI or reckless driving convictions, are at least 21 years old, and not a known or suspected terrorist.

Is there really any value in job placement assistance when the bar is set that low? The average turnover rate in this industry is 80%. That means that only 2 out of 10 drivers hired today will still be working for the same employer a year from now. Does anyone really think that there is much competition for the driving job that you are seeking?

Schools (end employers) will try to lure you in with their value added offers, but don't get sucked into buying everything that they are selling you. I've read many posts here where people have selected their future employer based upon the training pay only. I find that to be very short sighted because you will only be in training for 2 or 3 months maximum. How important is a few months of training pay when compared to years as a professional driver?

Frankly, my inner cynic wants to point out that the only things guaranteed in this life are death and taxes...

DUI:

Driving Under the Influence

Errol V.'s Comment
member avatar

Rick has the true bottom line:

Most private schools (have) ... a 3 week course that JUST SATISFIES the 160 hour requirement, and basically gives you just enough to pass a CDL exam to get your license.

This is true for nearly every CDL school, private as well as company. The main hurdle to a truck driving job is the license (Duhh). Trucking, along with most other careers is one where simple book learning is not a key to success.

In fact the part that allows you to become a great trucker is the final stage - road training with an experienced trucker. Several weeks, one-on-one. You're already hired and getting paid by then.

So don't complain if you feel "undertrained" once you get through school. I did complain to my road training (pre-CDL) instructor. That ticked him off so much that he made me drive local streets, left turn then right turn, for hours!

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.
Rick S.'s Comment
member avatar

Errol, after agreeing with Rick further opines:

This is true for nearly every CDL school, private as well as company. The main hurdle to a truck driving job is the license (Duhh). Trucking, along with most other careers is one where simple book learning is not a key to success. In fact the part that allows you to become a great trucker is the final stage - road training with an experienced trucker. Several weeks, one-on-one. You're already hired and getting paid by then. So don't complain if you feel "undertrained" once you get through school. I did complain to my road training (pre-CDL) instructor. That ticked him off so much that he made me drive local streets, left turn then right turn, for hours!

The benefit of the company school over the private(s) - is typically no cash out of pocket. Phase I of most training (PSD for example) has you operating the equipment you will be operating (pretty much) when you go solo. You are doing THE ACTUAL JOB - not driving an empty trailer around in circles on a huge parking lot - or the same route around the city where the school is located - YOU ARE MOVING ACTUAL FREIGHT, bumping REAL DOCKS. Even though you are running on a permit - you are DOING THE ACTUAL GIG.

And you have to screw up pretty big time - to get CUT LOOSE - so there's no "student placement" - you are ALREADY PLACED.

As far as "starter companies" go - for company training programs - a number of our members here have chose to REMAIN WITH their "start companies". Seeing that the "grass is not always greener", and seniority (and consistent hard work) get you a lot further, than hopping over somewhere else for a few more CPM , and starting at the bottom of the pack (again).

Like Deb (and others) I did the full time VoTech Course for around $2K, 320 Hour Certificated (for some reason, I think this is a Dept of Education requirement, it certainly isn't an industry one) and got a lot more time to practice and learn (including 1,000 road miles) - rather than spending a week in the classroom, a week doing yard skills and a week on city streets before being thrown into a road test.

OTOH - I had the TIME/flexibility and spare $$ to do a full time day class (that cut out after 2:30) and do my computer gig in the afternoon.

Rick

CDL:

Commercial Driver's License (CDL)

A CDL is required to drive any of the following vehicles:

  • Any combination of vehicles with a gross combined weight rating (GCWR) of 26,001 or more pounds, providing the gross vehicle weight rating (GVWR) of the vehicle being towed is in excess of 10,000 pounds.
  • Any single vehicle with a GVWR of 26,001 or more pounds, or any such vehicle towing another not in excess of 10,000 pounds.
  • Any vehicle, regardless of size, designed to transport 16 or more persons, including the driver.
  • Any vehicle required by federal regulations to be placarded while transporting hazardous materials.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.

PSD:

Prime Student Driver

Prime Inc has a CDL training program and the first phase is referred to as PSD. You'll get your permit and then 10,000 miles of on the road instruction.

The following is from Prime's website:

Prime’s PSD begins with you obtaining your CDL permit. Then you’ll go on the road with a certified CDL instructor for no less than 75 hours of one-on-one behind the wheel training. After training, you’ll return to Prime’s corporate headquarters in Springfield, Missouri, for final CDL state testing and your CDL license.

Obtain CDL Permit / 4 Days

  • Enter program, study and test for Missouri CDL permit.
  • Start driving/training at Prime Training Center in Springfield, Missouri.
  • Work toward 40,000 training dispatched miles (minimum) with food allowance while without CDL (Food allowance is paid back with future earnings).

On-the-Road Instruction / 10,000 Miles

  • Train with experienced certified CDL instructor for 3-4 weeks in a real world environment.
  • Get 75 hours of behind-the-wheel time with one-on-one student/instructor ratio.
  • Earn 10,000 miles toward total 40,000 miles needed.

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

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