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No. of Recommendations: 2
1. Take the tax penalty of 10% and increased income taxes on the old ROTH and reinvest in individual stocks (currently have about $22k in individual stocks). The way that I understand it, I will automatically pay $850, then the remaining $7650 would be added to my income and taxed (at 12%, so another $900 or so). This option makes more sense to me because I will have the opportunity to see more growth in individual stocks than in mutual funds.

Even if you would be moving this money into a Roth IRA, this would still be throwing money away. I wouldn't dream of taking an early distribution unless it was the very last option. BTW, it's not 22% that would be withheld, it would be 30% automatically (with a potential refund upon filing taxes).

Leave the money in my non-matching ROTH until I leave my current employer (4 years from now), where I I can rollover my matching ROTH into my non-matching ROTH. My non-matching ROTH won't grow that much, but I also won't take the hit for early withdrawals.

Four years from now you may not want to leave your current employer, or you might find yourself separated earlier than that. It's hard (and often fruitless) to predict the future. If and when you do separate from your employer, rolling over both your Traditional and Roth 401k savings to equivalent Traditional and Roth IRAs is what I did throughout my career.

3. Or what else would you do?? I lean towards option 1 because I don't mind taking risks this early in my life.

There is a fine line between reasonable and unreasonable risks, and my feeling is that Option #1 is an unnecessary risk.

You are young with many years ahead of you. I would encourage you to open a Roth IRA and make additional contributions, up to $6000 each for you and your spouse, which you could then invest as you wish. You can make your 2019 contribution up to April 15th, 2020 (tax day), and your 2020 contribution any time before the 2020 tax day in 2021.

And keep contributing enough to your Roth 401k to earn the full company matching contribution to your Traditional 401k.

Fuskie
Who would encourage you to keep things simple and not try to figure out ways to game the system because they will almost always fail; your best tools for long term growth remain the basic concepts of time and compounding growth...

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