Current Events > I'm thinking about cashing out my 401k from my old job

(+) Yeah! (+)

It's just been sitting there for years, got like $11,000 in there and it's starting to go down because of fees and shit. I could really use the money. Figure I'll lose 30% of it so I'll get about $7500 right? Is there any reason not to do this, like does it hurt my credit rating?

By the time I retire I should be making like a million a year anyways so the money I'm losing out on by taking it out now would be irrelevant.

If you do cash it out set aside half of what you get from it to pay the taxes on it next year.

TheKentster posted...

I could really use the money.

TheKentster posted...

I should be making like a million a year anyways

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NYmasajista posted...

If you do cash it out set aside half of what you get from it to pay the taxes on it next year.

Is that how it is? Fuck, that would pretty much defeat the purpose.

Or are you saying I'd get the full 11k and I need to hold on to half of that

You should roll it over into your current 401k. No fees when you do that.
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BlazinBlue88 posted...

You should roll it over into your current 401k. No fees when you do that.

Yeah I know but I want the money now.

Unbreakable posted...

TheKentster posted...

I could really use the money.

TheKentster posted...

I should be making like a million a year anyways

Is nobody else noticing these 2 points?
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J03can posted...

Unbreakable posted...

TheKentster posted...

I could really use the money.

TheKentster posted...

I should be making like a million a year anyways

Is nobody else noticing these 2 points?

Retirement is like 35+ years away, chief. I'm working on big things and it's the reason I'm broke now.

TheKentster posted...

NYmasajista posted...

If you do cash it out set aside half of what you get from it to pay the taxes on it next year.

Is that how it is? Fuck, that would pretty much defeat the purpose.

Yeah depending on the type of account you started when your 401k began it can either be taxed at withdrawal or at the initial deposit. Idr the names of the account types, however. You might be good, might not - still a good idea to hold some of that money.
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No, no, no. Retirement money should stay in a retirement fund. If you can roll it over into your current 401(k), great, do that. If not, set up a self-directed IRA with a low-fee company such as Vanguard, Fidelity, or Charles Scwab and roll it into that.

Cashing out a retirement fund will cause you to pay penalties and extra taxes. Just don't. You won't get anything close to $11,000 out of it. (You're better off leaving it alone and paying those management fees.)
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Sariana21 posted...

No, no, no. Retirement money should stay in a retirement fund. If you can roll it over into your current 401(k), great, do that. If not, set up a self-directed IRA with a low-fee company such as Vanguard, Fidelity, or Charles Scwab and roll it into that.

Cashing out a retirement fund will cause you to pay penalties and extra taxes. Just don't. You won't get anything close to $11,000 out of it. (You're better off leaving it alone and paying those management fees.)

My one with my current job is already up nearly as high as this one. I'm still building for retirement.

TheKentster posted...

Sariana21 posted...

No, no, no. Retirement money should stay in a retirement fund. If you can roll it over into your current 401(k), great, do that. If not, set up a self-directed IRA with a low-fee company such as Vanguard, Fidelity, or Charles Scwab and roll it into that.

Cashing out a retirement fund will cause you to pay penalties and extra taxes. Just don't. You won't get anything close to $11,000 out of it. (You're better off leaving it alone and paying those management fees.)

My one with my current job is already up nearly as high as this one. I'm still building for retirement.

What does that have to do with what I said?
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You could end up dead before retirement.
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To start, your plan provider will be required to withhold 20% for federal income taxes. So you'll get 80% of your 401k right when you withdraw. During tax time, the IRS will assess a 10% penalty and the rest is taxed at ordinary income
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No you should roll it over. You're gonna get a 10% penalty on top of federal and state/local taxes on the income.
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Take it all out now. Anyone could die any day. Enjoy life bro.
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Houston posted...

To start, your plan provider will be required to withhold 20% for federal income taxes. So you'll get 80% of your 401k right when you withdraw. During tax time, the IRS will assess a 10% penalty and the rest is taxed at ordinary income

Ok that makes sense.

I think I wanna do it!

TheKentster posted...

Houston posted...

To start, your plan provider will be required to withhold 20% for federal income taxes. So you'll get 80% of your 401k right when you withdraw. During tax time, the IRS will assess a 10% penalty and the rest is taxed at ordinary income

Ok that makes sense.

I think I wanna do it!

It's not the worst thing in the world if you're willing to part with the savings themselves. That's the main thing. 401ks are only useful if you're continuing to contribute and your employer is matching you. That's the point. Your employer hopefully contributed well over the amount of the 10% penalty, so that's one way to look at it.

You're going to get taxed anyways, and likely at a higher percentage later versus now.

Ultimately, though, it's obviously good to keep and save money and let it grow. I'd recommend rolling it over into your new 401k to give you a bigger gains boost. But if you need the money you need the money.

Just recognize for most people, thousands of dollars takes time to accumulate and once it's gone it's gone.
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