Thinking about cashing out a 401K

TheRightSide · Dec 10, 2009

Its not the main 401K that I have. Its a smaller one that has been just sitting there for a while now. Its only 6800. I figure I can clear out of the 6800 about 5000. 5,000 is all I need to completely finish my house. Get Drywall finished, Carpet and tile floors. Paint and maybe even get the central air unit put in.

I am trying to convince the wife this will be a good move. Hell if we ever have to sell the house it needs to be done in order to sell it.

thoughts......

AlwayzRight · Dec 10, 2009

TheRightSide said:
Its not the main 401K that I have. Its a smaller one that has been just sitting there for a while now. Its only 6800. I figure I can clear out of the 6800 about 5000. 5,000 is all I need to completely finish my house. Get Drywall finished, Carpet and tile floors. Paint and maybe even get the central air unit put in.

I am trying to convince the wife this will be a good move. Hell if we ever have to sell the house it needs to be done in order to sell it.

thoughts......

Fuck it, you may be dead by the time you are 65 anyway to use it.

Also.....the market WILL crash again...multiple times.

bigtendominator · Dec 10, 2009

AlwayzRight said:
Fuck it, you may be dead by the time you are 65 anyway to use it.

Also.....the market WILL crash again...multiple times.

With this type of advice, I am sure your savings account has about $1.23 in it.

rtuition · Dec 10, 2009

is you are under 59 1/2 you will have a 10% early withdrawal penalty + any income taxes, both state and federal. I do not know if you state also charges an early withdrawal penalty.

Depending on your income the best you would probably net if you are under 59 1/2 I would guess would be about $4500

have someone calculate what the net would be

r

kidman232 · Dec 10, 2009

i was under the impression that early withdraw your penalty fees would be higher than your projected 27%, i thought it was closer to 45%

bigtendominator · Dec 10, 2009

TheRightSide said:
Its not the main 401K that I have. Its a smaller one that has been just sitting there for a while now. Its only 6800. I figure I can clear out of the 6800 about 5000. 5,000 is all I need to completely finish my house. Get Drywall finished, Carpet and tile floors. Paint and maybe even get the central air unit put in.

I am trying to convince the wife this will be a good move. Hell if we ever have to sell the house it needs to be done in order to sell it.

thoughts......

1. - How will it impact your total household income for 2009, if you add 6800 to your income, are you close to going into a higher bracket?

2. Are you seriously considering selling your home in the next 24 months? If you are then it might be something to consider.

3. Can you sell the house without making those changes? I mean are they necessity or would it just be an asthetic improvement?

kidman232 · Dec 10, 2009

with the housing market and economy as such, is it really in your best interest to sink more equity into your home, espically coming at the expense of a 25+ % loss?

TheRightSide · Dec 10, 2009

bigtendominator said:
1. - How will it impact your total household income for 2009, if you add 6800 to your income, are you close to going into a higher bracket?

2. Are you seriously considering selling your home in the next 24 months? If you are then it might be something to consider.

3. Can you sell the house without making those changes? I mean are they necessity or would it just be an asthetic improvement?

1 My wife makes good money. I have been unemplyed for about 8 months.

2 well it would be an option if anything happens to my wife's job.

3 I could sell it but would have to have a rock bottom price since the house has no good flooring and drywall on the whole 1st floor. I ripped out the plaster and slats redid the electrical and insulated all of it. House was built in 1928. When I am done it will look great. To either live in or sell in the future.

festeringZit · Dec 10, 2009

I think it's an absolutely terrible idea.

You'd be better off getting a home equity or home improvement loan.

Or... most 401k's will let you take a loan against your 401k and
pay the interest back to yourself.

I have over the years taken 3 loans out against my 401k,
and paid the interest back to myself instead of someone else.

festeringZit · Dec 10, 2009

festeringZit said:
I think it's an absolutely terrible idea.

You'd be better off getting a home equity or home improvement loan.

Or... most 401k's will let you take a loan against your 401k and
pay the interest back to yourself.

I have over the years taken 3 loans out against my 401k,
and paid the interest back to myself instead of someone else.

Since you are unemployed, you won't be able to take the loan
against the 401k, but if your wife has a 401k she can
take the loan out against hers.

AlwayzRight · Dec 10, 2009

bigtendominator said:
With this type of advice, I am sure your savings account has about $1.23 in it.

No savings....although I do have a 401k..that I stopped contributing to once my match stopped. Only time to contribute is if you recieve a match.

Carpe Diem people.

TheRightSide · Dec 10, 2009

kidman232 said:
with the housing market and economy as such, is it really in your best interest to sink more equity into your home, espically coming at the expense of a 25+ % loss?

Well thats why I was thinking instead of using a chunk of our savings to cash this one in. We right now have 3 401K's. This is by far the lowest one.

bigtendominator · Dec 10, 2009

AlwayzRight said:
No savings....although I do have a 401k..that I stopped contributing to once my match stopped. Only time to contribute is if you recieve a match.

Carpe Diem people.

I agree and disagree with you on the match aspect.

Your still gaining the tax benefit. What are you doing for long-term planning for savings?

festeringZit · Dec 10, 2009

AlwayzRight said:
No savings....although I do have a 401k..that I stopped contributing to once my match stopped. Only time to contribute is if you recieve a match.

Carpe Diem people.

"Only time to contribute is if you receive a match"

Bzzt. Wrong.

You need to take a course in basic investing 101.

hno:

The only way people under the age of 45-50 in this country
are going to have anything at retirement is to save it themselves
because social security is bankrupt. So, would you rather save
for retirement with money already taxed, or tax deferred?

AlwayzRight · Dec 10, 2009

bigtendominator said:
I agree and disagree with you on the match aspect.

Your still gaining the tax benefit. What are you doing for long-term planning for savings?

To much debt to consider savings.

Whats your plan if you dont live to 65 or the market crashes and takes all your moneywhen you are about to retire?

festeringZit · Dec 10, 2009

AlwayZRight seriously needs to change his name to:

SometimesRightButMostOf theTimeWrong.

Akillies · Dec 10, 2009

how do you get to 45%?
10% is the early withdrawl penalty, what is the rest? you pay income tax no matter when you take it out.

festeringZit · Dec 10, 2009

AlwayzRight said:
To much debt to consider savings.

Whats your plan if you dont live to 65 or the market crashes and takes all your moneywhen you are about to retire?

Seriously, you're an idiot and have no clue what you are talking about.

Take a basic course in investing before you open your mouth
and try to give investment advice to others.

The basic concept of retirement investing includes slowly moving
your balance of risky investments (stocks) towards less-risky
investments (bonds) the closer one gets to retirement.

kidman232 · Dec 10, 2009

akillies- 10% fee, immediate taxes, possible risk of moving into a higher tax bracket etc etc.

i dont see with the way the economy and housing market is right now, why anyone would look to sink more money into their house (while paying extra fee's to do so). Espically when it doesnt seem to be a huge necessity

Doug · Dec 10, 2009

TheRightSide said:
1 My wife makes good money. I have been unemplyed for about 8 months.

2 well it would be an option if anything happens to my wife's job.

3 I could sell it but would have to have a rock bottom price since the house has no good flooring and drywall on the whole 1st floor. I ripped out the plaster and slats redid the electrical and insulated all of it. House was built in 1928. When I am done it will look great. To either live in or sell in the future.