does anyone know just how much of a penalty there is for

[bornthrifty]

closing your retirement accounts?

taxes, fees, penalties?

is it worth taking these hits to pay off the house? As it seems to me if the economy tanks my retirement account wont amount to a hill of beans anyhow, however a house that is paid for could benefit me and my decendants


not that there is anything in the economy to be concerned about, lol

 

[miss_thenorth]

I would check out Dave Ramsey's website or check out his book from the library--he gives sound advice on what to do monetarily.

 

[MorelCabin]

We did this once, years ago. I don't remember exactly what it cost us but I do remember the 'ouch' factor:>) I think you pay taxes the same as on your income, not sure about fees and penalties anymore.

All I know is that we lost enough, that through this whole financial uproar this year, we decided to take our chances and just leave them be:>)

 

[sylvie]

I have a friend who lost her job and is getting unemployment. Before her unemployment kicked in(after appeals) she began drawing on her retirement. She is now in deep hot water with IRS for $24000 for last year alone. She will lose her house.
I'd seek out some better advice than a SS forum, like an accountant or lawyer before moving on that.

 

[FarmerChick]

This is for me--my veiw since I do not know your financials and other issues obviously......

I would not do it unless I was forced.

Those taxes, penalities and fees are murder. Then you are taxed on the amt. you are left with also. You are so super taxed and penalized it is insanity truly. You GIVE tons of your money away---for no reason.
(now I say no reason if you truly do not have to do it)

If you retirement is not making money---MOVE it to somewhere that will make money. My retirements ARE making money. I had to move some around but it is still on the plus side.

Move it into CDs if you have too......fixed rate.

(again don't know you age, and all that)

I am 48 and I need my retirement money for when I am older. Who says that Social Security will be there? I think it will be but I want retirement money!

A paid house is great and I don't know the length left on your mortgage and all that.


So think very very very hard and long if it is the right thing to do.

once that money is gone, it is gone and hard to recover bigger money for retirement the older and closer you get to that age.


Me, it would take the worst possible situation to cash out my retirement.

But in the end, if I was super forced, yes I would...but oh, I would freak..HA HA HA

 

[Wifezilla]

If I had any money in a 401k at this point, I would cash it out and pay off my house. I would take the hit on the taxes and bask in the security of having a paid off house.

Do you trust the people in charge of the markets now? Do you trust the government?

 

[Big Daddy]

The initial hit is 20% if you pull it before retirement age. Then you pay max withholding and get some back when you file for the tax year it occurred in. I transferred my 401K funds in to the safest fund which is treasury bonds usually. You can also borrow against your 401k and then pay it back to yourself at an interest around 7% or so. There are tax disadvantages to that too. You should really consult an investment specialist. Paid off houses are nice but there is an advantage to the interest deduction and 20% is a hard hit.

 

[hikerchick]

In adddition to the aforementioned 20% withholding, there is a 10% penalty that you do not get back.

 

[k0xxx]

As sylvie said, "I'd seek out some better advice than a SS forum, like an accountant or lawyer before moving on that."

That being said, the 10% penalty can be avoided under certain circumstances, such as disability retirement. Had I known about it at the time, and waited an additional eight days before closing my retirement account, I would have not have had to pay the penalty. So definitely seek professional advice before doing so.

 

[bornthrifty]

don't worry a decision like this won't occur just from asking my question here, just been toying with the idea that all,