Need advice about potentially cashing out my 401K
Hi, I am in my early twenties. I just quit my job and have only a little over $4k in my 401 (k).
I am currently debating whether to cash out because I am starting PA school and will be taking out a substantial amount in student loans. I know I'll have to pay 20% in taxes with a 10% penalty, but I wonder whether taking that money, even with the taxes, would be better for me if it means owing less on student loans.
I know the general rule is not to cash out a 401 (k) and roll it over into a Roth IRA. However, my dad argues that I need it for PA school expenses and that there is such a small amount in my 401(k) that, when I get a job as a PA, I will be able to put 4k into a 401(k) in a short period of time. For him, it doesn't make sense to have that money lying around while using student loan money that will accumulate interest.
I kinda agree with his logic, but I want to make the best decision long-term. I am just not sure which decision would be better. I don't know if there is anything else I should consider in my decision. Any advice helps, thank you!
Edit: I won't be able to just keep the money in the 401K since I am no longer at that job, so I would either need to roll over into a Roth IRA or cash out. Just thought I'd add this in case it makes any difference.