Confirmed that I won't reach the age of 60. Want to free up as much $$ as possible so I can live NOW! I own my home ($20K equity). The $20K debt on credit cards is at the limit of my budget - but the rates are low (< 4%). If I cash in my 401K, this will free up my income and I will be on a cash-only basis - no more credit cards! The only upcoming major expense is a car payment that I will need to do in 1-2 years. I will still keep a $401K, but I will start at $0 again - my company has a good "matching" program. If I cash in my $44K 401K, that will give me the $20K to pay off these bills now - or I can leave it to grow and for my kids to use it to pay off my debts after I'm dead...Should I cash it in NOW?
2007-08-12 04:50:10 · 7 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
i think if you do all of the numbers you will be losing a lot of money taking an early retirement.. right off the bat is 4400 not counting want the income tax for this year will be you could be talking about after taxes and the 20k you owe as little as 16k. spread over over 14 years is like 100 a month. i could work out the exact figure if i had enough data --better plan would have your kids kick in now to help with your debt and when you die (hope u live longer than 60) they will get their money back from the estate!!!.
2007-08-14 10:11:55 · answer #1 · answered by Anonymous · 0⤊ 0⤋
I am generally in favor of getting out of debt, but cashing out any tax differed plan and paying the penalties is usually not a good plan.
Unless your children signed for the debts, they are NOT liable for them after you die. Your assets would have to be used to pay toward your debts before your heirs inherit anything, but any debts above that amount are NOT passed on.
That said, what are your plans if the doctors are WRONG. I recently met a 46 year old woman whose parents were told at birth she would never live to the age of 8. Obviously, they were wrong.
2007-08-12 14:15:34 · answer #2 · answered by STEVEN F 7 · 0⤊ 0⤋
If you cash it in you will be subject to taxes on all the $44K plus a penalty for cashing it before age 60. You can borrow I think 50% against the 401K plan, which will probably be as much as you will end up with if you cash it in with taxes and the penalty.
2007-08-12 13:53:38 · answer #3 · answered by Anonymous · 0⤊ 1⤋
Maybe you should re-think your impending death. In the 14 years between now and your "expiration date," medical advances could change things.
But, as the song says, live like you are dying...because we all are. You might be cured in 10 years or you might get hit by a car tomorrow. None of us knows when we'll die. "Living" doesn't have a lot to do with money. Go outside tonight and look at the Perseid meteor showers. Free, enjoyable way to spend an hour or so.....
2007-08-12 11:59:13 · answer #4 · answered by BuckarooBanzai 3 · 0⤊ 0⤋
You should find a legal way to get the funds to your children and out of your name, ignoring your debts. After the money from your estate dries up, the debt will be unpayable, and whoever has the money will keep every penny.
The fact is that debt is paid out of the estate, and no one else is responsible for them (not even the executor of the estate) unless they volunteer to pay them.
2007-08-12 11:54:05 · answer #5 · answered by patrickandamie 3 · 0⤊ 1⤋
If you use all of your retirement money, withdraw it and not replace within 60 days, you could experience a tax penalty. I would suggest you seek professional assistance from a tax advisor.
2007-08-12 11:54:38 · answer #6 · answered by Alterfemego 7 · 0⤊ 0⤋
yeahh cash it in!
2007-08-12 11:54:28 · answer #7 · answered by zaorox99 4 · 0⤊ 1⤋