Cashing in a 401K Early???

[Mattemma]

Would you cash in a 401k and just swallow the penalty fees to get that cash in hand NOW?

 

[Fred's Hens]

Transfer it, if you can, into funds where you CAN control it, if you wish.

No way you pull money out of your retirement yet. That 60K has time to grow to be 100K+ with very little difficulty. The past 4 years have been tough, perhaps, but we've done consistently, boringly, with steady growth throughout the past 4 years. But... we do have the ability to transfer within the family of funds in the 401. Easy and done immediately through website transaction.

Or, transfer your 401 to someone who will allow you to personally manage the funds, if you wish. Some 401s are locked pretty tight by the company you work for, but most are not. There's far more flexibility than most folks realize. In most cases, people simply are better off NOT managing their own funds because trying to time the market is a foolish endeavor that costs you money in the end. Just create a good blend, a mix of funds whereby if stocks are going one direction, paper or bonds are going another. There are over 100 funds open to my investing in my 401.

Bottom line? A anonymous, chicken forum is hardly to place to secure good financial advice, of course, not even from me. LOL
Go see a professional you trust. Until then, leave it alone.

 

[Mattemma]

Thanks for the post!

 

[Ole and Lena]

I cashed in a small one 3 years ago because I had to in order to raise cash to buy a house (auction, hard closing, conditions to meet etc). Would never have done it otherwise.

You will basically pay a 20-50% cash penalty to uncle sam depending on the value and your income. If you think we are going to hell in a handbasket and will see that kind of inflation in the next year it might make some sense. If you think silver, gold, copper or pick your comodity will go up that much and you roll the money into one of those or another comodity then it might make some sense but you'll probably break even at best.

If you have some hedge against inflation put away already, I would let it ride. There is a lot of upward potential for all investments when the economy turns around. It will eventually... either that or the shtf and all will be irrelevant except how good you are at surviving.

If you do not have a hedge, I would withdraw some and put it into silver or copper. I think gold is overvalued. Ag and Cu have industrial uses and will jump with a booming economy. Just my opinion, probably worth less than the time to read it.

 

[bakerjw]

Several years ago I had almost 20K in my 401K. Then the economy tanks and it dropped back to around $12K. I was in a bicycling accident and paid a visit to the ER. The caring hospital basically told me that I had 3 choices. 1 - Pay them. 2 - use a line of credit that they'll set up through a credit card company (at 18% interest), 3 - Don;t pay and they'd send me to collection. At the time I already had a hefty credit burden, so we bit the bullet and cashed the 401K out. We paid something like 20% up front as a penalty and set aside another 20% for income tax time. We paid off the hospital, all of our credit cards, and put the rest into savings.

In our situation, it was the appropriate thing to do. It got us debt free and we have pretty much been there ever since. It is up to you to decide if cashing it out is the correct thing to do. f you're struggling with a large debt burden, then sometimes it works well.

Just my opinion based on my life experiences.

 

[twentynine]

Nope! No way! Don't do it, unless it's home, health or education for your kids.

Been having an IRA/401k since 1981, lots of hard earned before tax money has gone into building the balance. I'm 54 years old, hopefully in just a few years, I'll start reaping the benefits.

Taking an early dispersement will cost a 10% penalty and 20% with holding. So if you cash in 10k you will only bring home 7k.