401K's?

[keljonma]

BTDT-GTTS

Check with the company managing your 401K for the specific requirements of cashing in your account early. If you are under 59 - there will most likely be a penalty - which can be as high as 20%.

If you shop around, you can probably find a flexible annuity with a guaranteed minimum interest rate of 4%. We have one - started with a deposit of $50 and we add as much or as little as we want when ever we can afford to put money in.

If you have one, an accountant or financial advisor would be the person to talk to before doing anything ... imo

 

[Nifty]

Ok, I sorta understand pulling out the money if you really really really need it, but pulling out your money from a 401k ESPECIALLY if it is in stocks / mutual funds right now... isn't that like buying high and selling low?

 

[FarmerChick]

Has anyone ever just cashed out their 401K's?? Is it hard? Do you HAVE to claim/prove some kind of hardship?
I know you have to pay a bunch in taxes and that is ok with me.
My DH lost his job and he had a little bit in 401K left from that company and we were thinking about taking it out and paying down our morgage.
Any advice?

Hard decision. You will lose so much of your hard earned money in taxes and penalty. Maybe no penalty if you do hardship etc. Check first...call and see what is required.

If you don't mind the cash in cost, then go for it if you truly need to use your money. If you can wait, then wait. Don't put the cart before the horse unless you have to use that money.

So sorry about his job!!!!!!!!!!!!!!!!! Scary isn't it??? Tony just got info last night that his rotational layoff will go well into May....was suppposed to be up into March only. UGH.....future is never known. Woof!

Hang in there PP!!!!!

 

[andehens]

Ok, I sorta understand pulling out the money if you really really really need it, but pulling out your money from a 401k ESPECIALLY if it is in stocks / mutual funds right now... isn't that like buying high and selling low?

Thats been my motto for years! Ha, Ha.
That is exactly what it was like, and I felt terrible cashing out. HOWEVER, losing it all seemed even sillier, I had forgotten about the 59 age thing, thats why I didn't have a penalty.

 

[Big Daddy]

Ok, I sorta understand pulling out the money if you really really really need it, but pulling out your money from a 401k ESPECIALLY if it is in stocks / mutual funds right now... isn't that like buying high and selling low?

You know if you think about it you have already lost all the money. Put your 401k in a safe fund that is not so volatile. When they start coming up but the stocks back at the same price you sold them at. some of the stocks aren't gonna come back. It also depends on how close you are to retirement. A lot of the stocks that dropped in 2001 are still not back where they were in 2001. I know that hold on is the standard mantra but I sure am glad I didn't hold on.

 

[Nifty]

I personally don't like to think I've lost money when the market goes down... you only "loose" the money when you actually sell. Kinda like a house, if you stay in it for 20 years it doesn't matter what the market value does in between because what only matters is when you buy and when you sell.

If people feel they are in stocks / funds / whatever that are dead and are never going to go back up it makes sense to pull it out of those funds and put it into something else, but in my opinion, taking it out right now, paying penalties, and not putting it back into something else that is undervalued right now (other stocks/funds/real estate) is, again in my opinion, like buying high and selling low.

As for me, I'm trying to be terribly frugal right now to save money to put into my ROTH IRA and try to pick up some cheap cheap cheap real-estate.

Buy low, sell high!

 

[PamsPride]

I am 29 so I have a LOOOONG time until retirement.

 

[Nifty]

It is interesting that the ads showing up below the forum in this thread talk about real estate in an IRA. I have friends that got lucky and pulled their money from stocks and did a "self directed" retirement account and put the money into some areas where real estate had already gone down. They sold their stocks while still high and purchased real estate while it was still relatively low... all within their retirement accounts.

Again, I think they got lucky with the timing... I doubt strongly that they were able to time the markets (stocks / housing) so well on purpose.

 

[Big Daddy]

Yeah timing is everything. I switched to treasury bonds and cash based to keep my money safe. If I lose my job due to the economy I will need all my 401k to live on. It's doubtful I could find another job for even half of what I make. It's just a safety net. Most of my coworkers are down 40 to 50%.

 

[On Our own]

I'm on the side of never touching the 401 that you don't really lose the money until you sell.

Having said that, i have some control over some of mine and I had switched it around to safer stuff last January. but, I was limited in what I could choose....