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401k cash out?
Posted on 11/30/16 at 11:31 am
Posted on 11/30/16 at 11:31 am
Question for you all...don't bash me for my question.
I currently work in the corporate world and am in the hiring process to become a police officer. The PD offers pension benefits after 20 years of service. I currently have a 401k with a 35k (rounded) balance. From my understanding, I will earn the pension at retirement after the 20 years. Am I nuts to consider cashing out my 401k since I would receive a full pension at retirement from the PD and use that money to help towards a future DP on a house? I calculated that after taxes I am looking at roughly 24k take home. I'm in my late 20's, in case it matters in your assessment. Thanks in advance!
I currently work in the corporate world and am in the hiring process to become a police officer. The PD offers pension benefits after 20 years of service. I currently have a 401k with a 35k (rounded) balance. From my understanding, I will earn the pension at retirement after the 20 years. Am I nuts to consider cashing out my 401k since I would receive a full pension at retirement from the PD and use that money to help towards a future DP on a house? I calculated that after taxes I am looking at roughly 24k take home. I'm in my late 20's, in case it matters in your assessment. Thanks in advance!
This post was edited on 11/30/16 at 11:33 am
4
Posted on 11/30/16 at 11:48 am to Herb484
Did you include the 10% penalty in that calculation?
Posted on 11/30/16 at 11:53 am to Janky
He could avoid the 10% penalty for first time home purchase (up to $10k) I believe?
But stil, yes your crazy for doing that. You'll probably pay 25% in tax on that since $35k will likely put you in a new tax bracket. I can almost guarantee you could find a loan for less than 25% interest.
But stil, yes your crazy for doing that. You'll probably pay 25% in tax on that since $35k will likely put you in a new tax bracket. I can almost guarantee you could find a loan for less than 25% interest.
Posted on 11/30/16 at 12:00 pm to Herb484
See if PD you going to offers a 457b and roll it into that.
Posted on 11/30/16 at 12:01 pm to Herb484
You don't know if you'll stay in the PD for a full 20 years. You might plan to, but 20 years is a long time. Things change.
Keep the $35k in your 401k and give yourself a more comfortable retirement. It's better for you in the long run, even if you do end up getting that PD pension.
Keep the $35k in your 401k and give yourself a more comfortable retirement. It's better for you in the long run, even if you do end up getting that PD pension.
This post was edited on 11/30/16 at 12:02 pm
Posted on 11/30/16 at 12:47 pm to Herb484
Depends on your needs, but cashing out isn't a good investment strategy for a young 401, and you should have a nice lump there with 20 years of growth to assist in your retirement...
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