I have two 401K accounts. My current account with my employer had a return last year of 18 percent. The other account from my previous employer had a return last year of only 9 percent. Should I cash in this account and pay off credit card debt?
2007-03-19 02:54:19 · 7 answers · asked by Ethanol Man 1 in Business & Finance ➔ Personal Finance
If you are below retirement age, withdrawing assets from a 401k will be a taxable event, and an additional penalty will be applied. This is a very bad deal for you.
Better to borrow from the 401k to pay off the credit card. At least you wont be hit with current tax since you wont be withdrawing assets from the account presently.
2007-03-19 03:00:10 · answer #1 · answered by Anonymous · 0⤊ 0⤋
DON'T DO IT!
Your debt may seem harsh right now but it will pass. Poor performing or not, your 401k is helping you to plan to be more financially stable in the future. I made that mistake a little over two years ago and there isn't a day that goes by that I do not regret it. And if you are not happy about the performance overall of the acct, look into other investment companies. Although it is sometimes better (because they match here and there) to go through work, if that co. isn't satisfying your expectations - you should look around.
2007-03-19 03:06:04 · answer #2 · answered by Mia 1 · 0⤊ 0⤋
no--keep your retirment accounts separate from you foolish spending that created the most expensive debt, short of a loan shark. you can "rollover" your poor performing 401k to a brokerage account and then you are responsible for good or bad investment decisions. this might be a good idea, especially if the old 401k has a lot of the employers' stock in it. if you cash out your 401k you are penalized 10% of the value, plus you then have to pay full income tax on top of the penalty.
2007-03-19 04:59:18 · answer #3 · answered by Ovrtaxed 4 · 0⤊ 0⤋
You don't furnish the available options with the lower yield account.
You might want to first analyze the better performing account to determine how it is being invested (growth, value funds, index funds, etc.) and if you are able to revise the second account's distribution of investment in various funds in a way that matches the investments in the better performing funds, that would be your first option.
You second option would be to roll over the poor performing 401k into a self-administered IRA with a fund that has a broad range of investments so you can better control the distribution of your fund into more appropriate investments.
2007-03-19 03:07:06 · answer #4 · answered by Latigo 3 · 0⤊ 0⤋
NOOOOO!!!!!
you'll have a large tax penalty for the early withdrawal of the 401(k). Either reallocate your underperforming 401(k) to better funds or look into rolling it into the other 401(k) for simplicity or into a traditional IRA for more control.
2007-03-19 03:02:29 · answer #5 · answered by Magilla G 2 · 0⤊ 0⤋
NO!
You will pay taxes and penalties for early withdrawal. Move the poor performing one to an IRA.
2007-03-19 02:59:00 · answer #6 · answered by Fester Frump 7 · 0⤊ 0⤋
Don't do it!!! If you can, take out a small loan at a lower interest rate than your card instead. Try prosper.com - they helped me out. I would also check into the company below, they have a good rep for getting secure loans out... good luck with whatever you do!
2007-03-19 14:23:00 · answer #7 · answered by brettR 2 · 0⤊ 0⤋