KEEP THE FAITH! We are entering dangerous waters!

[Atash Hagmahani]

Good question. I'm glad you asked.

Look at the investment options for the 401(k) account. They usually--not always--have an investment option that is relatively close to "cash". DOUBLE-CHECK with the administrators. Unfortunately, sometimes it's something like a totally unsecured money-market fund full of unsecured commercial paper. 

Sometimes they also have something that (in theory) should rise as inflation rises. What you probably want to do, is invest in a combination of the "near cash" and the "inflation hedge". Most inflation hedges (gold, petroleum) are cheap right now. I'd probably go about 50-50 cash/inflation hedges.

To get more control over your retirement options, you might consider OPTING OUT. Stop contributing, and instead, contribute to a ROTH IRA. This is with AFTER-TAX dollars, but it's worth it, because then your accumulated earnings not only grow tax-free, but are distributed tax-free. This is a screaming bargain.

But first, make sure that you are qualified to contribute. That depends on your income. There is a phase-out threshold. I could probably look it up.

The preceding advice was offered on a goodwill basis and does not constitute advice to buy or sell securities. Do your own due diligence. You are responsible for any investment decisions that you make.

[oscar615]

Roth IRA's are tax free for now.  But all it takes is them to right a new law or code and they are taxed right along with everything else.  Including the up and coming healthcare tax.  They can do it to healthcare they can do it to Roth IRA's too.

[hancocs]

I can't remember who it was but I thought their was a Gold Company out their that said you can roll over your 401K into gold. 

[Atash Hagmahani]

You can roll your 401(k) plan into all sorts of interesting things if and when you leave the company that sponsored it. There are two other options, but they don't apply to you.

[MountainMeg]

Also keep in mind that when you cash out a 401k plan or traditional IRA you are going to pay federal and state taxes PLUS 10% penalty to the feds if you are under 59.5 years old and a possible penalty to state.  (CA is 2.5%)  There are some exceptions to this, but they are difficult to meet.

If you have a Roth IRA, you can take out your principle portion without tax consequences.  The taxes and penalties would apply to any profit above and beyond your contributions.

[Atash Hagmahani]

What MountainMeg told you is the reason that it is ALMOST ALWAYS a very BAD idea to withdraw early. If you think you might need it back early, don't put it in. It's that simple.

She also stated one of the benefits of the ROTH. Because the PRINCIPAL was already taxed, they don't care if you make a hardship withdrawal. HOWEVER, even this should be avoided, unless you are one really sharp investor who could put the principal in temporarily, make a ton of earnings off it to jumpstart the compounding earnings process, and then withdraw it for some other purpose.