Empty 401K?

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Zaphod's picture
Zaphod
Status: Member (Offline)
Joined: Jun 8 2011
Posts: 1
Empty 401K?

Hello,

I have been a 'troll' for a bit.. thought i would post something :)....

Disclaimer : I Vow to not accept any response as financial advice..etc.etc...my actions are my own.. and my own responsibility.

I have only about 5 yrs from my past job in my current 401k. With the Dollar going down the tank fast ( along w/ Many other things ).  Im presuming it would be financially prudent to drain said 401k and take the huge 40% hit and put it into gold bullion?

I cant find it at the moment - however i did see an attempt at a new law to limit the amount of Loans one could take on their 401k's in any given year. What i'm leaning towards : does it appear we are close to the, Empire known as the US, halting all 401k withdrawls to 'protect' the currency?

Having never withdrawn from a 401k.. it appears there are some "rules"

"Employers set 401k withdrawal limits based on IRS guidelines. In general, workers under the age of 59 1/2 may withdraw money from their 401k plans only if they or a family member has large medical bills, to make a down payment on a house, to prevent foreclosure on their homes or to pay for college for a child or a spouse."

Any idea how harshly these are imposed?.. If I pull it out to stop a foreclosure.. and it doesnt actually halt it?.... to see the nice people running the gulag i go? :)

Thanks much.

txgirl69's picture
txgirl69
Status: Bronze Member (Offline)
Joined: Apr 21 2009
Posts: 96
Emptying in progress....

I have taken money from one 401k and a roth ira. When I filed my taxes, the IRS/H&R block didn't ask any questions. I was ready to produce anything they wanted, but they asked for nothing. I went as far as asking the office manager if I needed any documents and if the IRS would say anything about my "hardship" withdrawls, and her response was a confident, "no, it won't be any problem." They asked me a couple of questions trying to save me from the penalties/fees, but that was it......

I'm considering plundering my last 401k as we speak (or, as I write!)....

 

txgirl69

msnrochny's picture
msnrochny
Status: Bronze Member (Offline)
Joined: Nov 4 2010
Posts: 58
401K Loan

I had the same concern you did.  My company would not permit me to remove my dollars from my 401K until I am 591/2 or I am fired, even if I was willing to take the tax hit.

Another approach available in all 401K's (which I took advantage of) is to take a loan out against the dollars you have saved.  I was able to take out a sizable amount of savings, and then pay it back over 5 years (via paycheck deduction each pay period).  While the dollar is depreciating, I'm in effect getting higher value dollars out now, and paying them back with lower value dollars later.  You can use what you withdrew in the meantime to purchase gold, silver, supplies, etc.  If you take a loan, you have to pay interest on it, but all the interest goes back to your 401K savings account.

Additionally, I decided to stop contributing to my 401K, and invest that money in ways that I think will benefit me and my family in the coming years.  I just do not feel safe with the limited funds that were available to invest in, given the craziness of the stock and bond markets.  Also, while I think it might be a stretch here in the U.S., other countries have taken the pensions and 401K-like savings of citezens during times of economic crisis.  Holding real assets and not dollars vulnerable to devalution may make sense.  Do your homework, and follow your instinct. 

Good luck!

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Taking A Loan Out On Your 401(k)? Don't Do It

My thoughts are like this. If you think the economic situation is precarious, then you should be worried about the stability of your job.

If you are worried about the stability of your job, then you should not be taking out a big loan from your 401(k) and gambling that you'll be able to repay the loan substantially before you lose your job. Because when you lose that job, you will have to return the money. If you can't repay all of it (I think it's something like 90 days), that money is treated as a distribution and you are taxed on it and have to pay the penalty as well.

Even if you don't lose that job or leave that job... since economic situation is uncertain, it's also likely that you will fail at your market timing gamble on earning enough through investing the loan proceeds. Your earnings on the money invested with your loan proceeds are taxed, and you have to pay back the 401(k) loan in monthly installments with after-tax money...

The wiser thing I wuld suggest, is to consider reducing your 401(k) contribution to the minimum to get a match, or stopping yoru 401(k) contribution altogether, and start pumping up a self-directed Roth IRA.

Note: Here are other 401(k) and IRA and retirement cashout forum topics, found using the handy Google Custom Search box on this site:

401(k)
http://www.peakprosperity.com/forum/401k/55664

Anyone Taking The 10% Penalty And Cashing Out 401k or IRA?
http://www.peakprosperity.com/forum/anyone-taking-10-penalty-and-cashing...

Should I Cash Out Early On My State Retirement?
http://www.peakprosperity.com/forum/should-i-cash-out-early-my-state-ret...

Cashing Out Your Retirement Early And Buy PM's?
http://www.peakprosperity.com/forum/cashing-out-your-retirement-early-an...

Poet

 

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