I want to liquidate my entire 401K

[SandrA9810]

I've heard leaving the money in the original 401k plan is better than rolling it into an IRA. I'm happy with where my money is sitting, and wouldn't want to deal with the hassle of changing it. Maybe the next time that I can have a 401k, it might be an option.

 

[Cheshire Figment]

The entire amount that you take out will be added to all other income for computation of your 2011 Income Taxes. In addition, if you are less than Age 59½ at the time of the withdrawal you will have an additional Federal Tax of 10% of the amount of the withdrawal.

 

[fatuhiva]

Sure I think about it, but I don't think I'll be actually doing it. I'll have to pursue a cheaper worthwhile dream...

 

[DawnM]

After working for 2 years I took out mine to go back to grad school. Stupidest thing I have ever done, but I was 24, young, and impressionable.

I wouldn't do it again, EVER!

Our nest egg is looking pretty good now. I worked for 16 years (but now only 14 has a retirement fund on it) and DH has worked for 18 years and we have each put in 15% of our income towards retirement.

There is NO WAY I would touch this.

Dawn

 

[Colleen27]

Yeah, I'm tempted from time to time. For me, it comes from spending too much time on the gardening/homesteading sites I read... Get to hearing enough doom & gloom about peak oil and such and you start to wonder if there might be better ways to put that money to use. But it passes and I keep plugging along under the assumption that I'll be retiring in a world more or less the same as what we know today.

 

[Free4Life11]

I plan to cash out my 401k when I am laid off later this year. I never intended to use it for retirement, but as my emergency savings. I figure with the employer match, I'm getting a 100% return on my money (minus any investment losses.) Even after the 10% tax penalty, I'm making out better than if I had put my money into a crappy 1% interest savings account.

 

[PinkRhombus]

I plan to cash out my 401k when I am laid off later this year. I never intended to use it for retirement, but as my emergency savings. I figure with the employer match, I'm getting a 100% return on my money (minus any investment losses.) Even after the 10% tax penalty, I'm making out better than if I had put my money into a crappy 1% interest savings account.

Why would you have a 401K and not plan on using it for retirement? What WILL you use for retirement?

The tax penalty is going to be a LOT more than 10% by the way.

 

[ohlas]

I can tell you I have no desire to open an orphanage. I can hardly handle the 16 year old that God gave me. I have dreams but not of them are worthwile enough to dump my 6 figure 401K. School? Ehhh. Been there. Done that. So, I guess I'm good.

I got one of those nasty things living in my house too

Think I would cash in my life savings to send her to boarding school


Dont do it leave it alone if you want to go back to school do what im doing work more spend less and spend all extra money on school, think local small then get grant money for harvard...

 

[Dale-Not-Chip]

Taking your 401K before 59 1/2 is the same as just throwing half of it away.

 

[ohlas]

I plan to cash out my 401k when I am laid off later this year. I never intended to use it for retirement, but as my emergency savings. I figure with the employer match, I'm getting a 100% return on my money (minus any investment losses.) Even after the 10% tax penalty, I'm making out better than if I had put my money into a crappy 1% interest savings account.

More like 40% tax penalty unless you pay tax before it goes into the account... just think of 401k money as invisable money till you are like 62-65 years old, its not really there.

Dont do it dude....bad idea

 

[mrsklamc]

do they still have orphanages????

Yes, there absolutely are still orphanages.

 

[Luv Bunnies]

No way. Our 401(k) accounts are for our retirement. If we didn't have those, we'd be working well into our 80s! Right now, that money doesn't exist. We don't even think about it, except to make sure it's invested properly and making us as much money as it can.

 

[leahjade]

who do you plan to have support you in your retirement, the government or your kids?

 

[NY Disney fan]

who do you plan to have support you in your retirement, the government or your kids?

Either one. Whoever wants to volunteer first.

 

[leahjade]

what's one more? It feels like I'm already supporting half the country now. On the radio today 1/3 of Pa residents are on some type of welfare.

 

[DawnM]

WHAT???????

Welfare was never meant to be long term. I just don't know what the answer is to this anymore, and it looks like it will just get worse in the years to come.

Dawn

what's one more? It feels like I'm already supporting half the country now. On the radio today 1/3 of Pa residents are on some type of welfare.

 

[Colleen27]

WHAT???????

Welfare was never meant to be long term. I just don't know what the answer is to this anymore, and it looks like it will just get worse in the years to come.

It is hard to compare today's numbers to the original intent, though, because when welfare was conceived no one imagined the health care situation we'd be in today. Long term welfare is mostly medical assistance these days, not cash or even food stamps, and the recipients are mostly the children of working families whose parents have no employer-based coverage or who cannot afford the family coverage that is offered.

 

[ohlas]

WHAT???????

Welfare was never meant to be long term. I just don't know what the answer is to this anymore, and it looks like it will just get worse in the years to come.

Dawn

yes it was. I have never seen any government program get smaller just bigger... whats going to happen is there will be less of my money to pay for it all... sorry grumpy tax time. I say stop helping everyone let them be hungry nothing like being really hungry to change your mind about working harder...

Im also sick of hearing there arent any jobs out there i have 2 parttime job now that make up for half of what i lost when i lost my job and still interviewing for a better job...

so stop being grumpy like me lol

 

[branv]

That would be a big negatory.

My older brother finally left a job he'd had for 15 years b/c he was in one of those situations where he did all the work around the place, made it possible for his boss to do very little work but still look good to his bosses, so my bro wouldn't ever get promoted because the boss needed him too much where he was. You can imagine the frustration of being punished for being too good a worker. So he just flat out quit one day without another job and cashed out his 401K to "pursue his dreams". That was about five years ago.

Today he's back doing another job he dislikes because he blew through his 401K faster than expected, and has a family that depends on him. He's struggling to rebuild a 401K for retirement, starting from $0 , with not much extra income to put aside. He talks all the time about how it kills him what he did, and how much money he simply flushed down the toilet to penalties/taxes. Believe it or not, he's STILL dealing with tax issues from this due to not understanding how he was supposed to handle it when he cashed the 401K out.

But to be honest, even if I didn't know that story I'd never do it except in a dire emergency. If you want to go to school, there are student loans, scholarships, and programs for working students (DH is in one). If you want to pursue a dream, then figure out how to do it on the side until it shows some sign of being able to support itself (or up your retirement funds now so you can retire early and spend all your time doing it). Feel like helping orphans, volunteer.

 

[wdwfan16]

No way. That is for my golden years so I don't eat cat food!!