You find yourself between jobs. The rent is due and the car needs brakes. And there, like a pot of gold, sits your 401(k) account. You can roll over the money into an Individual Retirement Account for your future needs or take the cash to satisfy the wolf at the door today.

When Velicia Kay Johnson of Cheyenne found herself in such circumstances, she split the difference: She rolled half over and cashed out the rest.

At her new job, Johnson says she will participate in the 401(k) plan when she becomes eligible. In the meantime, she puts $100 a month in her Individual Retirement Account.

"If I can do more, I will," she says, "but I still have one more teenager in high school, and once she's out I can start putting more in."

Still, Johnson, 38, knows the financial ground will be difficult to make up. Johnson's husband also borrowed against his retirement fund, for which they will be making payments for five years.

"We're still not going to have what we should have," she says. "There's no way."

After 16 years with a company, Marc Smith of Casper used $10,00 from a retirement account as seed money for his own business. He rolled the majority of the money into an IRA.

Even after taxes and penalties, he says, his return on investment so far has been better than it would have been by leaving the money alone.

"I feel the company has given me a better return than what the stock market had done up until this time," he says.

He also has his own business, and the many intangible rewards that go along with it.

"How do you put a monetary value on that?" he asks.

Terri Archer, 53, of Medicine Bow took a similar tack. She used a chunk of 401(k) money to invest in a smokehouse operation. Archer also works as director of Carbon County Senior Services. If she stays, she will be eligible for state retirement.

"I'm also hoping with this small business that I can put money aside privately and be able to have more money than with my 401(k)," she says. "I pretty much made half of my money back right away."

Archer isn't fretting about having enough retirement income. In her job, she sees how senior citizens are managing now.

"Ninety percent of them are still working part-time," she says. "So I don't feel that I'm even worried about it. I'm going to be working for a while."

There are many reasons people take money from a 401(k) account. But on the whole, says Bill Thompson, branch manager and vice president of investment for Piper Jaffray in Casper, workers would do well to use such accounts for their intended purpose.

Liquidating a 401(k) before the age of 59 1/2 means paying taxes on the full amount, plus a 10 percent penalty. In the end, you might end up with only 65 cents of every dollar in the account.

Then there's the work money can do for you if invested over time.

"They say there's only one thing better than money compounding, and that's if you can compound your money tax deferred," Thompson says.

With an 8 percent rate of return, your money will double every nine years.

Thompson says for a young person saddled with debt, cashing out a 401(k) when between jobs can be tempting. But a better strategy is to devise a budget to handle all a family's obligations without tapping retirement funds.

Business Editor Tom Mast can be reached at tom.mast@casperstartribune.net, or call (307) 266-0574.