The company I work for is sold to another company. 401k question?

Question

My former income was $48,000 per year, now it is $7200 per year and there are no similar jobs with matching salary in my area. I would like to cash out my 401k in 2007 and would like to know the penalties invoved.
My wife's salary is in the mid 30k and i have enrolled in a nursing course, but will not graduate until December 2007. My 401k balance is $24,000 and I am 45 years old.
Can anyone help?

Answer 1

Don't do it! As a former investment broker, I can tell you that you'll not only pay a strong penalty, but whatever you cash out will be added to your yearly income and you'll have to pay taxes on a higher amount (be advised that whatever is in that 401k has NOT been taxed yet... so if you cash it out, it's all taxable). I'd roll it into an IRA before I'd cash it out. See a financial planner for details.

Answer 2

If you need the money to pay off high interest loans and credit cards then by all means do it. No matter what time you take out the money you will have to pay income tax on it so don't even consider that into your financial plan. Ask yourself if the 10 percent penalty is worth it to you. If you have a huge high interest credit card debt then it may be worth your while to take it out and start over with putting the money into a Roth IRA.

Remember that IRA does mean Individual RETIREMENT Account. I am faced with 29 percent credit card per month credit cards on almost 19,000 of debt that has been plauging me for a while. Its costing me almost 400 in interest every month alone. If I can take out my 401k, sure its gonna cost me money but I'd rather do that and start over than pay over 5,000 in interest this year.

Answer 3

If you really need the money go for it, but realize that you will get hit with a 10% early withdrawl penalty, plus another 20% for taxes. So you will net a total of 16,800.

Answer 4

Please do not cash out. You will pay 10% penalty + your income rate. Please do not hand to Uncle Sam of your hard earn money.. If you and your wife can live on her salary,please do it. Cut down spending, cut down cable bills, satelite bill. You will be fine. In the mean time, while you are in school, please learn how to invest the right way too..
If your new company had 401k transfer option, just transfer it to new company, if not Rollover IRA, please do not han the check to uncle sam
Yes you could learn invest by yourself. it is your money, you should know how to do with it. for starter check this site out.

http://www.pathtoinvesting.org/index_fla...
http://www.stockcharts.com
http://www.streettalklive.com>... university. a lot amount of information. It will serve you well
I accumulate in good amount in 401k at the young age.I could share with you. when consider invest in stock market. you should consider basic 3 things:

fundamental analysis==(economic data,finincial health, management, business model, competetion)>>what to buy

technical analysis==(chart+indicator)>> when to buy

Sentiment/schycho analysis==>>mood of investor, Contrarian point of view.
Market cycle===>> check out book Trader Almanac by jeff hirsch will give you inside stuff
When you combine 3 thing, It is one of the powerful knowledge goinh with you for the rest of your live

At the age of 32. my 401k is amassed 73,000.00 and 30000.00 in taxble account. by follow simple rule

Answer 5

you will pay the tax on the whole sum, plus a 10% penalty. The place that you have it with will take out the penalty and give you a receipt to file.

Answer 6

do NOT if at all possible disburse it. Roll it over into an IRA and avoid the 50% or more (depending on state) taxes and penalties

I did a disbursment and got reamed at tax time

Answer 7

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