Withdrawl your 401K plan?

Discussion in '401k, IRA and Retirement' started by Rosyrain, Apr 5, 2014.

  1. Rosyrain

    Rosyrain Senior Investor

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    I have read many articles in which it says that you should never withdrawl your retirement plan until it is time to retire, unless you are in a financial crisis. I understand that the IRS gives you a stiff penalty...33% if you withdrawl early? Is there ever a good reason to withdrawl and rebuild a retirement account at a later date, perhaps to start your own business or to help you out in the event that you want to move on to a new career?

    I have been thinking about moving on to a new career or starting my own business and the money in my account could help me out a lot in the short term and I know that I could rebuild into a new account very quickly, but is this a smart move?
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I wouldn't do it myself to start a business or whatever. Only if you absolutely needed it during a crisis IMO.

    Of course we all hear about someone cashing out their retirement plan while young, mortgaging their home, borrowing and begging, etc and hitting the bigtime. But when you consider that 9 out of 10 private companies will take all of your $ and fail, there's no doubt that there are many more people who did the same thing and crashed and burned.

    Of course if you've only been investing in it a short time and only have a few grand you can quickly build back up, it's not as big of a waste as if you'd been maxing it out for decades and had hundreds of thousands or millions.
     
  3. wanderingwildman

    wanderingwildman Well-Known Member

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    I had to do it out of necessity recently. The penalties are painful. However, it beat sleeping on the streets:)
     
  4. SteakTartare

    SteakTartare Senior Investor

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    I wouldn't ever touch retirement funds unless it was absolutely, positively, necessary. The penalties are very steep and it could derail your retirement planning. There are dire exceptions, of course, but unless its come to that point, its best to leave it be until retirement.
     
  5. Rosyrain

    Rosyrain Senior Investor

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    I am still young enough that I think I would cash mine out if I really needed money bad. As long as you are young, there is plenty of time to make it back before you run into retirement trouble.
     
  6. Annabell

    Annabell Well-Known Member

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    My advice? If you can get away with it, never touch it until the day you retire. If you withdraw it early, not only do you have the harsh penalties, but you also have to begin anew on building up for your retirement. Unless you're absolutely sure that you can make back that amount of money, and more, by withdrawing it, never touch it.
     
  7. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I'd consider any and all other options first - a second job, selling the home and other assets, even loans - before touching retirement money for whatever reason.
     
  8. Annabell

    Annabell Well-Known Member

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    I wouldn't agree with selling the home. Maybe renting our a room or two, but yes, I agree otherwise.
     
  9. Rosyrain

    Rosyrain Senior Investor

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    Thanks for the advice everyone, I will check out all available resources to me before I think about touching the retirememt savings any further!
     
  10. vincentL

    vincentL Banned

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    Saving for retirement was important and it should be started as early as possible. Some seniors are still confuse about 401(k) plans. Despite negative feed backs about this retirement plan, yet there are some good news. Over the past year 401(k) plans have been accumulating more earnings.
     

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