Time to withdraw the 2nd half of the IRA tomorrow!
We thought about withdrawing our pitiful little 401k a month or so ago. We found out about the restriction that we aren't allowed to touch our f-ing money unless we fill out paperwork and go through a hardship process. We do have roof damage to our house we could state as a repair to our primary residence (our only residence). Thing is, they want you to try to get a loan to repair the damage first. I will not go further into debt. I'm really fine with the roof damage, I just want to have a reason to cash out the 401k before its gone. I'd rather do a kinda uneeded repair around the house than let it burn away to nothing where it is.
Sad thing is, we had just upped our 401k contributions to a responsibly uncomfortable level in 2008 because we're 'grown up' now and are starting to think about retirement. When I read we weren't allowed to access it, we were so dismayed we immediately halted our contributions. So, I feel we just threw away several thousand dollars we really could have used. Makes me sick.
Does anyone think its advisable or worth it to look into all the hoops and red tape for the 'hardship' withdrawal, or should we just let the money go?
I'd have to ask Marsh how we did it, but my poor memory tell me that we rolled ours into IRAs and then took the loot. But I remember things like food and what happened in the market, not small print.
Yup. Pulled the trigger yesterday. When I left my former company almost 2 years ago, I rolled my 401k (which had lost about half its value from the high) into a similar vehicle (IRA?) that allowed me to do more the funds. I wound up with ~30% in GLD (ETF) and the rest in cash. Due to the recent 'chatter' since the holidays, I feel the time to get out is now. I plan to use the check to buy PMs and 'gamble' that they will go up in dollar value over the next 12-13 months until I have to pay the taxes and fees, then cash out some coins and pay IRS. My wife is in the same situation as some here, she can't touch hers until she leaves her company. We're not willing to do the hardship paperwork, so, we'll see what happens. Who knows, she could be laid off anyway. I slept better last night than I have in months.
Interesting note, my financial 'advisor' didn't give me any pushback at all, which is a change in tone for him. I've spoken with him a few times in the past year since discovering the crash course, and never got the feeling that the 3Es resonated with him. His compliance with my decision yesterday makes me wonder if he is seeing in the marketplace supporting data to Chris'.
Finally!!! My wife watched CC and is on board. While she isn't as convinced about the severity of the coming crash she is willing to help me with the preparations. I emailed my advisor to cash out my IRA and will finally be able to sleep.
I plan to use the check to buy PMs and 'gamble' that they will go up in dollar value over the next 12-13 months until I have to pay the taxes and fees, then cash out some coins and pay IRS.
This was my thought as well and why I didn't cash out all my IRA in 2009. I figured I'll have some time for the gold to increase in value during the year before the taxes are due. Also, 2010 is probably a year in which taxes (in the US) won't skyrocket due the the November elections. In 2011 I would expect taxes to increase. Nothing for sure, just my thoughts.
If Harry Browne were alive, he would say that PM's haven't begun to rally yet. They don't move until people lose complete confidence in the dollar. Then they move like a rocket taking off and fall just as soon as the dollar comes back. Only this time, maybe the dollar won't come back.
The upshot is that although we can be bullish on gold long term, the short-term outlook for gold is probably a crap shoot.
Undertand this is just what worked for me; your milage may vary.
In 2006 I got really annoyed with my 401K. The fees were horrendous, like 10%-- to the point where I actually asked the president of my employer if she was related to them--and I threatened to quit the 401K program. The woman they used as a broker for the program wanted to keep my account, so she offered me the following deal.
I allowed the money to stay in the 401K for one year of payroll deductions. Then, at the end of each year, I took it out and put in in a self-direceted IRA. Yes, I lost more in fees to do so, but at least the money was now accessible and I had more options. Thanks to my investing where I thought it would help and not being constrained by bad choices I lost a lot less than most people in the meltdowns in 2007, etc. Then, when I quit the job to move to another (less populous, more rural) state I cut all ties to the 401K and rolled the money into a completely separate IRA at a new bank. I have to tell you that it took longer than it should to get my money, but that may have been a fuction of my name change due to me getting married when I moved.
Again, this is what I did. Your milage may vary.
After reading Surviving the End of the World as We Know It, it became obvious to my husband and myself that our best investments would be into sustainable agriculture, home security, health, and a simple lifestyle. We already have a paid-off, modest home (no McMansions here; we were too thrifty for that) and we were trending off-grid, so we intesified that trend. Our reasoning was that if things are honky-dory in the future this will still be better for us and save us money. If (I know, when) TSHTF we will be in a postition to have a chance to ride things out and help our neighbors. (That's already happening. In a recent power outage we were admired for being ready, and we may get company next outage. A couple opf neighbors say they want to learn from us.)
We put together a 3-month pantry and wil expand it. We have permits and will have an irrigation well going in in a few weeks. We've chosen an airtight woodburning stove and are getting that installed in April. We've bought everything for a large Square Foot Garden including the lumber, soil additives and heirloom seeds. We've bought a $600 part to repair our solar hot water heater. We are getting a solar atic fan, too. Meanwhile we've started getting things for home canning and dehydrating food. We've doing some security updates to the house including fences and I am getting a lesson on firearms.
We have gotten extensive work done on teeth and are getting items that will give us practical trades when TSHTF (mine wil be heirloom seeds and gardening classes). It feels fantastic to get these things going. We are not victims; we are choosing our future instead of having it chosen for us.
New here, this issue has been on my radar for years. I have many different retirement funds (money in Roth IRAs for me and my wife...just pulled these, money in Trad IRAs for both us, 401K for my own company which I can pull the plug on at any moment, Def. Ben Fund that was set up for my company-I just terminated this one.)
My only remaining retirement funds are in the Trad IRA and my 401K. I'm just about ready to pull the plug. They are with Vanguard and I see I can just close them, elect to have no funds witheld and pay the penalty and taxes next year. I'm guessing it will be 10% penalty, the taxes are a bit of a wild card...my business is doing ok, I could cool my jets and not bring in anymore income so my W2 is lower this year. Any advice for those who have done this would be appreciated.
I did just that about 3 years ago and have never looked back. IMO the10% "penalty" is a small price to pay for the peace of mind you might gain.
It has also freed up capital to in vest in PM's, solar, generator, pay off all debt, insulate, and food and water storage plus hedge my bet by putting away some cash. Any penalty I paid was more than offset by the increase in present PM pricing alone. My wife and I sleep much better at night knowing we have potenially created a "safe haven" for our adult children and grandchidren. I did structure my IRA liquidation to a tax year in which I purposefully earned less.
I would say bottom line: follow your instincts.
When we called to take ours out they would not let us ... 401K Vanguard . What is up with that ? Something about have to have emergency ?
Let me know the 1,2,3's of getting ours our too please . We would do it in a heart beat and not look back .
I have about 30K in my Vanguard Ind. 401K account. I set it up through my business (I'm the only employee)...I have not tried to take the funds out, but I can just go ahead and terminate the plan since it's my company and not employees, etc.
The majority of my funds are in the Trad IRAs. I've been going back and forth trying to get my CPA to get me info on the taxes, but he's been MIA
I went through the online process to pull my IRAs and Vanguard will let you do it no problem...Regarding 401Ks from your current employer, I don't know what to tell you.
Do you recall what amt in taxes you had to pay?
Have moved some funds of my own. You can do it in yearly chunks - just enough so that you don't tip into the next tax bracket. This income is taxed as your last dollar earned so just Google "tax brackets 2010" to find your tax bracket.
I cashed out one 401k last year and took a loan from the other (that I cannot close due to still being with the sponsoring employer) to pay off all debt. If you cannot close the account, check into taking a 401k loan. It's a way to protect the money in the account and if you are paying off any debt, you are loaning the money to yourself. That means that the interest you pay goes to your own account and that any outstanding loan money is safely invested with you. I've toyed with the idea of maxing out the borrowing and buying gold with it, but have not made that jump yet.
I just spoke with my CPA...Looking at around 45% hit in taxes and penalties to do this to the IRAs and 401K. Ouch.
I did the same about 3 months ago. 45% on account I had been building for 27 years. I felt great after making the withdrawal and still do. I agonized over the decision for almost a year. I will use the proceeds to close on a "Plan B" place in a small town in two weeks. The whole process has been very liberating.
Everything involved with those retirement accounts is structured to make one fearful of taking control of their own assets. It feels good to thumb my nose at all that BS.
I encouraged my husband to do this in 2006. He took a hit, in capital gains tax, but made it up by ploughing it back into gold bullion.
It is agonizing. I've had it on my radar for 2 years, but the past year or so has been on my "TO DO" list. I keep putting it off, but assume I will feel the exact same way you did once I finally pull the trigger.
Did you ask your CPA what the rate will be next year after the Bush Tax cuts have expired?
Took roughly 70K out (the max without approval by administrator) and never looked back. Most in PMs and kept cash. Have done some home projects that might not have been done otherwise. And as Davos asks - I sleep great. Considering pulling more for mortgage payoff, but more than likely more energy efficiency (solar and water), PMs, and land. lots of land around here.
That is one of the issues that led to my decision.
We got creamed this year in taxes from the last two years withdrawals. Oh, well. I don't regret it. Yet.
I don't have a whole lot in it, and had already moved the balance into cash from mutual funds anyway, but now I'm wondering if I should go ahead and make the full withdrawal and buy the preparation gear/guns/ammo and physical gold with what's leftover.
Anyone else already done similar or thinking about it?
Not that you're not right, but you know how when people are advocating or doing something en masse then the contrary is true, like in a bubble? Again, y'all may be the smart ones and I'm damn liquid but I haven't gotten there yet, even after pouring massive amounts of this site's type of analysis into my brain (all those blogs, from zerohedge to Mish to DailyBail, Mad Max Keiser, Ellen Brown, Schiff, Simon Johnson, Denninger, ad infinitum). Am I just sitting on my inertia? Would there be time to prepare once it's obvious? Please explain; I'd be grateful.
Not that we had that much, but my wife's 25 years of 401K savings from nursing all came out last year and went into a (big) solar array - the tax credits on the array about offset the early withdrawal and ordinary income tax -- so there are ways to do it. Now the power company can pay the pension by buying electricity from us and we don't have to depend on Wall Street - plus we no longer have electric bills, even with Arizona air conditioning
Kind of Ironic after many took a 50% haircut what is another 10% LOL.
Before cashing in your IRA you should learn about a Self-directed IRA. it allows you to invest in precious metals and real estate among other things. You can buy your retreat without the early withdrawal penalties. May not be right for you, but worth a look.
I am personally of the opinion that we are better off opting out of any program (including self directed IRAs ) because any of these programs pull us into the control web that keeps us so neatly kept under their (and Wall Street/Bank) thumb. Every time I even think about participating in some government program, I find myself deluged with paperwork and restrictions that I will not live with. The idea that anything from Big Brother that has any financial spin to it will somehow make my life better is an illusion.
iDoctor -- yes we took the haircut, and much was to do with the restriction placed on that invested money by the rules. In our case, we spent much precious time fussing about the tax & penalty bite rather than thinking clearly about the investment. Had we taken full responsibility for the money and handled it without the cloud of restriction, the end result would have been better. In hindsight, simply paying taxes in the first place and staying clear of the "approved" investments that the so called expert investment advisor/thieves recommended would have been much better.
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