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Don't Do It! (Cashing Out 401ks)
The Market Ticker ^ | 11-08-2009 | Karl Denninger

Posted on 11/09/2009 7:34:12 AM PST by blam

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To: autumnraine
You know, that has been my thought as well. Should I cash in some of my 401(k) and pay off my mortgage. The penalty will remain the same no matter what but the income tax you pay will be the tax rate in effect when you take the money out. It seems reasonable that if this is going to happen, better to take the tax hit before the Bush Tax reductions are taken away.

I've helped them as much as I can, buying groceries and letting them stay here with me, but it can't continue forever. I'm getting close to retirement and if there are layoffs where I work, the older folks will go first.

41 posted on 11/09/2009 9:33:20 AM PST by texgal (end no-fault divorce laws return DUE PROCESS & EQUAL PROTECTION to ALL citizens))
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To: blam

I wonder what the leftists in Congress really want.

On one hand, they could eliminate the early withdrawl penalty, encouraging people to tap their 401k and (theoretically) become more dependent on the gov’t.

On the other hand, that’s money lost TODAY that they could spend getting themselves reelected (though really, I don’t think this matters much, they can just borrow as much as they want anyway). And if people keep their 401k, it gives the gov’t an excuse to cop out of their SS payments (because you don’t “need” it).

The one thing I do “know” is that when retirement time comes for me, the gov’t WILL change the rules I’ve been living under.


42 posted on 11/09/2009 9:53:34 AM PST by Darth Reardon (Im running for the US Senate for a simple reason, I want to win a Nobel Peace Prize - Rubio)
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To: autumnraine

Somewhere in the country, someone needs workers. I know people who went to Iraq to get a job. They just mail the money home until something local opens up. I’ll do that before I raid the 401K.


43 posted on 11/09/2009 10:02:36 AM PST by AppyPappy (If you aren't part of the solution, there is good money to be made prolonging the problem.)
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To: Labyrinthos
My son in law filed for bankruptcy a few years back and the court took 1/2 of his 401K. This was probably before the new bankruptcy law passed by congress so I don’t know if the same applies today. I doubt it. IRA's, 401k's, pension benefits, social security, etc., have been exempt from creditors both in and out of bankruptcy since I was in law school 25 years ago.

I just called him to verify and yes indeed, they took $32,000 of his $64,000 401K. This was in 2001, btw.

44 posted on 11/09/2009 10:04:25 AM PST by Larry381 ("in the final instance civilization is always saved by a platoon of soldiers" Oswald Spengler)
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To: AppyPappy

Hey, can I borrow a few grand to relocate?


45 posted on 11/09/2009 10:11:33 AM PST by autumnraine (You can't fix stupid, but you can vote it out!)
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To: autumnraine

“Hey, can I borrow a few grand to relocate?”

Do I look like a bank?


46 posted on 11/09/2009 10:32:38 AM PST by AppyPappy (If you aren't part of the solution, there is good money to be made prolonging the problem.)
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To: AppyPappy

Well why not! You are awful free with the advice. Of course not really realistic for a good many people, but hey! It’s easy to armchair criticize.


47 posted on 11/09/2009 2:02:40 PM PST by autumnraine (You can't fix stupid, but you can vote it out!)
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To: PeterPrinciple
I don’t think your house can be seized either so it is not a good arguement...............

A distinction without a difference.
Sure it can't be seized on account of bankruptcy but, if you can't pay the mortgage, the bank can repossess.

So what's the difference?

48 posted on 11/09/2009 2:50:42 PM PST by Publius6961 (Â…he's not America, he's an employee who hasn't risen to minimal expectations.)
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To: texgal

The .mil offers many young people both a marketable trade and congress approved programs to pay off student loans. Not everyone in the military is a combat soldier, there are mechanics and medical personnel, clerks and clergy, cooks and contractor types, legal beagles, the list is endless. It helped me get on my feet (in more ways than one!) and focus priorities. Paid off all my student loans and credit card debt, automobile loan, etc. Veterans make great civilian employees after their stint is up typically too.


49 posted on 11/09/2009 3:25:39 PM PST by Freedom4US
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To: cripplecreek
My mother cashed hers out nbot because of a fear of government getting it but because she saw how fast it was eroding in the stock market.

Every 401(k) has a money market option. I think it's a requirement. So, all she had to do was transfer among funds in her account.

There was no need for her to close the account and withdraw the money, if that's what you mean by "cash out".

I understand the fear that the government is going to come after 401(k)/IRA funds. But, I think there's really no need to worry. The fastest way for the Democrats to lose their majority status would be to try to confiscate retirement assets.

If you think the health care debate was contentious, a fight over retirement assets would be incendiary.

50 posted on 11/09/2009 7:30:14 PM PST by justlurking (The only remedy for a bad guy with a gun is a good WOMAN (Sgt. Kimberly Munley) with a gun)
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To: Oldexpat
why should people have 401k's anyway?..seriously....Pelosi and her creeps want to take over our retirements and too bad for us that have saved a few dollars....

work and saving does not pay...

your kids will get free college and you'll get free healthcare if you don't work and have no money....

51 posted on 11/09/2009 10:25:36 PM PST by cherry
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To: autumnraine

think of how many more have had serious hours cut back.....its scary times....


52 posted on 11/09/2009 10:28:51 PM PST by cherry
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To: Freedom4US
He tried to get into the military earlier in the year. The Army recruiter was so overwhelmed with applicants who had college degrees they did not even want to talk to him. They told him they had more than they could handle at the time and to call back later. Mike has a GED and was working on obtaining a degree in junior college. His grades were not the best and he is ADDHD which sometimes makes his behaviour a bit different than others who do not have this.

Perhaps this is something he should try again. Thanks for the information.

53 posted on 11/10/2009 6:34:57 AM PST by texgal (end no-fault divorce laws return DUE PROCESS & EQUAL PROTECTION to ALL citizens))
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To: Publius6961
So what's the difference?

The discussion was using the money to pay off house mtg. Argument against it was that money was protected in 401k from bankruptcy. It is also protected in house equity.

In bankruptcy, your equity is protected and you can reaffirm your home mortgage and discharge other debt. These are current rules but under socialism, all bets are off.

54 posted on 11/10/2009 9:07:48 AM PST by PeterPrinciple ( Seeking the truth here folks.)
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