Cashing out 401K...advice please

[SLDL]

Thank you all so much for your responses! I really appreciate it!

 

[maryssasmom]

I work in the 401k division - bad idea. 20% mandatory federal taxes, possibly state tax also - depending on where you live and then you will have to pay a 10% penalty tax because he is under age 59 1/2. he would be much better off rolling into an IRA.

 

[SarahKate]

Everyone else is right, don't do it unless you roll it over into something else.

DH helped out his dad several years ago and cashed out his retirement plan (it wasn't that much about 7k) and gave his dad money.....the penalties were horrific. It was not a smart idea and I know DH probably wishes he would have done something different.