401k Questions

1. Take a lump sum distribution, in which case your 401k plan provider will write you a check for the value of your account less a 20% withholding tax mandated by the IRS, and a 10% withdrawal penalty. The 20% tax that is withheld, but NOT the 10% penalty, will be counted against your income tax payable or will be counted towards any refund due for the tax year when you file your tax return.

General exceptions: The 10% penalty does not apply to distributions that are:

1- Made as part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from a qualified retirement plan, the payments must begin after separation from service).

2- Made because you are totally and permanently disabled, or

3- Made on or after the death of the plan participant or contract holder.

4- From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55

5- From a qualified retirement plan (other than an IRA) to an alternate payee under a qualified domestic relations order,

6- From a qualified retirement plan to the extent you have deductible medical expenses (medical expenses that exceed 7.5% of your adjusted gross income), whether or not you itemize your deductions for the year,

7- From an employer plan under a written election that provides a specific schedule for distribution of your entire interest if, as of March 1, 1986, you had separated from service and had begun receiving payments under the election

8- From an employee stock ownership plan for dividends on employer securities held by the plan, or

9- From a qualified retirement plan due to an IRS levy of the plan.

(Source: IRS)

Any loan now will cost you around 5-10%. I don't see how 30% is a good deal.

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Any loan now will cost you around 5-10%. I don't see how 30% is a good deal.

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Understandable. But I wont realize the effect of the 401k withdrawal for another 30 years. I have time to build it back up. I've been very good about saving up to this point (other than that stupid investment obviously), which is one of the reasons I have enough in my 401k to help me in this situation. I have time to do it again.

I dont know...just no use building up a great nest egg for retirement and living a stressful life until you get there.

Anybody have/know a good financial planner I can talk to specifically about my situation?

Any financial planner will tell you not to pull it out. They make money by people having their money trapped until retirement age.

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Any financial planner will tell you not to pull it out. They make money by people having their money trapped until retirement age.

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If you qualify, getting a loan from your 401 would be better. Although that has its own problems at least you aren't paying an outrageous rate.

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I agree with this. The only problem with the loan is that it will immediately come due if you lose or change your job. If you feel that you can/will pay it back and your job is stable, the loan is the lesser of the two evils, IMO.

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Maybe you should just sell the property. Where is it and how big of a loss do you think you would take

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Yeah, not really an option....Wont be able to sell this sucker for at leas 5-10 years...