Should I withdraw my retirement to help pay for relocation costs for my PhD program?

Question

I am 28, single, and applying for PhD programs in Public Health. I will most likely get full funding for the PhD. However, I am worried about moving expenses , etc. I have been working for two years and have a 401(b) retirement plan. When I quit my job to start my PhD should I withdraw the money in order to help pay for my moving expenses? I understand that there will probably be about a 30% penalty. Any ideas?

Answer 1

Touching your 401k is the last thing you wanna do, it works so against your interest that is greatly discouraged. It is far bette to apply for a credit card with 0% introductory APR that will get oyu going the 1st year, and then paying interest than drawing out of your nestegg and limiting its compunding and growing ability. The other solution could be a HE line of credit or Loan, or if you have a car, get a collateral secured loan at your favorite bank. These options are far better than getting the $ from your retirement.

Even if you didn't put any money on it anymore and leave it alone, your $ would grow a lot, I mean A LOT! and you can have more on it by age 65 than anybodu starting at age 35 and contributing more tha you have. don't make that mistake, because time doesn' go back and then it would be too late to make up for the time lost financially speaking..Good luck on your new venture!

believe me , I am a financial banker adv.

Answer 2

I agree, withdrawing from your 401(b) would be a mistake. You would be subject to a penatly of 10% and ordingary income taxes if you make a withdrawal from your account. Keep in mind, that it might be possible to deduct some of the moving expenses you incur on your taxes-this might help a little. Use www.irs.gov to see if you are eligible. Is is possible for you to take a loan form your 401b account? It is possible to do this on most 401k's-that might be another alternative.

One thing I wouldn't agree with the other person on is to put the expenses on a credit card, this should be a last resort. Not being able to pay off the balance will cost your much more in interest expenses b/c CC's usually have higher interest rates than other sources of credit.

Can the moving expenses really be that much?

If I were in your position, I would try all other alternatives before I resulted to taking from your 401b, using a CC, or getting a loan-maybe even hitting up a relative for some money or selling some possessions on Ebay to make a little extra cash (then you wouldn't have to move them).

Good Luck!

Answer 3

Absolutely Not!!!

Don't ever touch your 401K. Not only do you have to pay the tax and fees (which means you only get about 1/2) of it, now what are you going to retire on.

Your not one of those who thinks Social Security will be around are you?

Cash flow any education. It's the only way to go.