Penalty for early withdrawals from 401(k) plan can be avoided


"DON'T PAY the 401(k) 10 percent penalty!" says Black Enterprise. "Generally, if you pull money from a retirement plan before age 59 1/2 you get hit with a 10 percent penalty -- and you'll also pay taxes. But here are exceptions to plans like IRAs, 401(k)s, 403(b)s, etc.: "(1) Substantially equal periodic payments: Withdraw money on a regular basis. (2) Disability: If you're severely injured and can't work. (3) Medical expenses: You can withdraw money for medical expenses over 7.5 percent of adjusted gross income."

STOCK QUESTIONS: Carolyn W. of Reisterstown asks, "Why shouldn't I just buy the stocks that Warren Buffett buys?" Answer: You never know when he's going to sell.

Joseph P. of Highlandtown asks, "Why do stocks go down when interest rates rise?" When interest rates go up, many people sell stocks and buy higher-yielding CDs, Treasury bills, etc. That selling depresses stock prices.

WALL STREET WATCH: "There will be much better opportunities to go bargain hunting several months from now." (Wellington Letter)

"Use rallies to lighten up because the market is 41 percent overvalued. Be cautious about buying on dips." (No-Load Fund Investor)

"With strong earnings and economic growth ahead, one can justify today's 23 P/E multiple. But even though that's somewhat expensive, most S&P; 500 stocks trade at a lower P/E, giving hope for a relatively good year." (Hardesty Capital Management.)

"The question is not whether super-growth stocks will falter, it is when they will falter. Stay on the sidelines." (Chartist Mutual Fund Letter)

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