Thinking Of Withdrawing From My 401k.

[91stealthrt2]

I wouldn't do it if your current loans/ credit cards are not high interest. Just keep at it and making over payments to pay them off. Set up a strict budget and stick to it.

I haven't paid any interest in 4+ years besides my home and student loans. Before that I had almost 10k in debt(being a stupid 18/19 year old) But I still live paycheck to paycheck trying to make ends meet. My 401k is slowly growing(although my company quit matching about 2 years ago) I'm slowly paying down the mortgage, and my wife's masters degree loans just dropped in. Which SUCK! lol

[Alex3000gt]

I wouldn't do it if your current loans/ credit cards are not high interest. Just keep at it and making over payments to pay them off. Set up a strict budget and stick to it.

I haven't paid any interest in 4+ years besides my home and student loans. Before that I had almost 10k in debt(being a stupid 18/19 year old) But I still live paycheck to paycheck trying to make ends meet. My 401k is slowly growing(although my company quit matching about 2 years ago) I'm slowly paying down the mortgage, and my wife's masters degree loans just dropped in. Which SUCK! lol

Bingo. He's looking for an "easy out" which is what got him into this mess in the first place.

[UTRacerX9]

It is about a 30% hit, or 25% at least. If you're under age 59.5, you have an automatic early withdrawal penalty of 10% that goes to the government. So basically, you are withdrawing 5k and you might as well light $500 of it on fire. The other is added as income, of which you are taxed at your regular rate. Figure 15 to 20%. So, unless your credit cards are charging you a higher rate than 25-30% interest, you are doing the wrong thing by withdrawing from the 401k.

If you call Fidelity and talk to someone with a lick of sense, they'll tell you the same thing.

Taking a loan is a bit different, but as you've already found out, you can't take the full amount. Some companies will let you take up to 50%, some are 30-40%, it just depends. $1200 seems a bit low, are you sure the $5k is fully vested? You don't get to withdraw any of the money that isn't vested.

[Hammer]

So, I want to get out of debt and NOW!

I've been paying almost everything I have into my debt and it's going down but not fast enough. So, I live paycheck to paycheck since I'm overpaying on my payments. I looked and I have $5,000 in my 401k which I've never intentionally put money into. I found out that my company has been putting money from my paycheck into it over the pas 2 1/2 years and they also do 100% matching.

So, if I withdraw that I take a 30% hit which leaves me with $3,500. This would pay off my Stealth and the rest, paired with my regular payment, would drop my credit card down to $1,200. That only leaves me with a personal loan and a student loan.

This is pretty tempting to me as once the credit card is payed off I would take that $500 and month and put it with the $400 a month I would be paying on the personal loan meaning I could pay it off in a matter of months. I'm 29 and I have time to get that money back into my 401k after I'm out of debt as I can afford to pay extra into it.

I guess the question is, if you were in my shoes, what would you do?

Good luck to you whatever you decide to do. I am thinking what you really need is a much higher paying job. Don't we all?

[Polygon]

Yeah, I'm not fully vested. Hammer's right, I just need a higher paying job. I'm just going to leave it alone. If I was going to withdraw from it, it wouldn't make any sense until I find a new job anyhow and if I get a higher paying job, no real need to pull that money anyhow.

[Alex3000gt]

Good conclusion!

[nosferatudracon]

Yeah, I'm not fully vested. Hammer's right, I just need a higher paying job. I'm just going to leave it alone. If I was going to withdraw from it, it wouldn't make any sense until I find a new job anyhow and if I get a higher paying job, no real need to pull that money anyhow.

...because I have to have at least 5 characters in my response.

[Lugnut]

I didnt read all of this thread but if you take money from your 401k without the intention of repaying there is a penalty assessed and the charges come out to more like 48 % +/_ of what you are withdrawing ...

[Jimvr4]

Yeah, I'm not fully vested. Hammer's right, I just need a higher paying job. I'm just going to leave it alone. If I was going to withdraw from it, it wouldn't make any sense until I find a new job anyhow and if I get a higher paying job, no real need to pull that money anyhow.

You should be contributing the minimum amount to get the 100% match from the employer. This is the easiest money you will ever make. Just tighten your belt and pay off your debts as you can. And get more education or training to get a better job. And try to get vested before you leave that job, otherwise you'll be leaving their matching contributions on the table when you exit. Also, when you leave a company take your 401K money and open a rollover IRA. You wont be taxed and you can invest the money any way you choose instead of being limited to a companies investment choices.

[Zybrainn]

It is about a 30% hit, or 25% at least. If you're under age 59.5, you have an automatic early withdrawal penalty of 10% that goes to the government. So basically, you are withdrawing 5k and you might as well light $500 of it on fire. The other is added as income, of which you are taxed at your regular rate. Figure 15 to 20%. So, unless your credit cards are charging you a higher rate than 25-30% interest, you are doing the wrong thing by withdrawing from the 401k.

If you call Fidelity and talk to someone with a lick of sense, they'll tell you the same thing.

Taking a loan is a bit different, but as you've already found out, you can't take the full amount. Some companies will let you take up to 50%, some are 30-40%, it just depends. $1200 seems a bit low, are you sure the $5k is fully vested? You don't get to withdraw any of the money that isn't vested.

You're making a poor assumption in that there will be no income taxes if a person is 59.5 and withdrawals from 401k. I don't care to look up what that rate is, but i know it is not 0%.