There is no way to avoid taxes. You either pay the taxes now, or your pay the taxes later. Depending on your situation, I will probably recommend doing a ROTH 401k (if your employer has that option). And, if you would like to maybe use your "retirement" money before retiring (like most people do), then I will recommend using something else, along with your 401k. If your employer matches a percentage (say 5%), then don't put more than 5%, and do something else with the rest. That "something else" will depend on many factors, but I could give you some ideas based on your situation. Feel free to send me an email to edgar@arceofinancial.com

Blessings!

You obviously can make investment choices inside your 401K plan, it is never a good idea to have too much of your retirement money tied up in the actual company stock inside the plan. The penalty for taking money out of your 401k is two fold 1. the immediate 10% TAX penalty and then you also have to pay income tax on the amount of the money you take out before 59.5. You will get taxed no matter what you do if you REMOVE the money. There is some ability to remove the money for medical payments and down payments on homes.

The penalty for withdrawing money from a 401k is 10%. You also must pay taxes on the withdrawal since the money went into the 401 untaxed. With the Roth, your money goes into it after your money has been taxed. There may be early withdrawal penalties involved with it depending on your age and how long the money has been in the account.

You can't avoid taxes on retirement accounts. If you want to save for a house or whatever, you should be doing so OUTSIDE of your retirement accounts.

I have stock in my employer and I have money in my separate 401K through that employer. Theoretically, if I am understanding the company stipulations, I can take their stock and throw it at other investments in my 401K if I desire.

As long as I work for the company, I can't sell the stock that I have with them and get the money without leaving completely. I know that the 401K "can" be pulled out, but I also know about the 30% to 40% penalty for doing that below 59.5 years old.

I'm still fairly young. I want to save for my future retirement...but at the same time, I plan to never fully "retire" (e.g. I would probably still be working moderate part-time hours).

Basically, I'm trying to figure out a way as to how I can invest in my 401K options and employer's stock...and roll that over into something more "touchable" that I could actually use before retirement. I know that people don't recommend that, and I'm not talking about a wild spending spree. It would be for something like a major downpayment on a house. Of course, I'd be "starting over" again.

Is there a way to diminish the tax penalties and still be able to touch the money eventually (before retirement) if I rolled them into something else? Or is it inevitable for it to be taxed the 3o to 40% regardless of what I put it into? I have thought about just rolling it into a Roth IRA. I understand the Roth IRA to be taxed when you transfer the money into it.