Mike Rich or other finance gurus

[OUHOMER]

OK, here’s the deal, when my company was bought out, they did not switch my 401 k over to new company. So I have a couple of options
1. Make them switch to new company
2. Leave it where it is
3. Cash it out.

I am think very seriously about cashing it in. I know , I know 40 percent off the top with taxes and early with draw penalty. I still have about 17 years to work before I am 65.
But if I cash it in I can be debt free now (except for the house).

So If I can get debt free and triple my contributions to my new 401k, Start a Roth IRA. Would that not be the way to go?

:pop:

[Frozen Sooner]

I will never ever ever tell someone that cashing in their 401(k) is a good idea without more info than you've provided.

Since they're giving you the option of cashing out, why not roll it into a self-directed traditional IRA?

[jk the sooner fan]

So If I can get debt free and triple my contributions to my new 401k, Start a Roth IRA. Would that not be the way to go?

:pop:

the question is not whether you can make the extra contributions after getting out of debt.....its "will you?"

if you've developed a lifestyle thats prone to putting it on credit with the idea of paying it off next monty.......your retirement account wont grow much

[OUHOMER]

Well, i thinking more about, the here and now I guess. yes the option to roll it into a IRA is there. But , I have some how gotten a little deeper in with the Credit cards than I like to mention. I am carrying some heavy debt there, plus i could pay off everything else cars, CC, all of it.

[jk the sooner fan]

well i'm certainly no financial guru, but i DO know that getting out of debt is a VERY good thing......you just have to change your habits afterwards

[OUHOMER]

the question is not whether you can make the extra contributions after getting out of debt.....its "will you?"

if you've developed a lifestyle thats prone to putting it on credit with the idea of paying it off next monty.......your retirement account wont grow much

yea, normally we stay with in ours means, this last year has been a strain due to, son in college, daughter who I think must have some blond in her ( no offense to the blonde's here on the SO). things just seemed to be stretched and things are getting thinner

[jk the sooner fan]

yea, normally we stay with in ours means, this last year has been a strain due to, son in college, daughter who I think must have some blond in her ( no offense to the blonde's here on the SO). things just seemed to be stretched and things are getting thinner

trust me, we're members of the same club - i know how you feel

what you might consider doing is taking out some of your retirement account and paying down some debt, and leaving the rest and rolling it over.....so that its not all wiped out

[OUHOMER]

trust me, we're members of the same club - i know how you feel

what you might consider doing is taking out some of your retirement account and paying down some debt, and leaving the rest and rolling it over.....so that its not all wiped out

Thats kind of what i was thinking. the opportunity poped up and I was exporing ideals. I know its hard to replace the safe retirement money and how much it will earn over the next 15 years etc, just wondering if being debt free for that period of time would equal out. If i could stay debt free:rolleyes:

[Frozen Sooner]

Well, Homer, look at it this way:

Say you owe about $60k. You have $100k in your 401(k). You've got 17 years to retirement.

Assume a yield on your 401(k) of 11%, which is historical S&P yield. You've got $589,509 in your 401(k), which can be pulled out at whatever tax rate you're willing to deal with that year.

Assume your debt is averaging 10%. Amortized over 17 years, 60k in debt at 10% works to $792.90 per month and a total of payments of $95,148. Finance charge is $35,148.

So basically, you're trying to save $35,148 by throwing away around $489k. Unless you're stretched so thin right now you're having trouble paying your bills, this is kind of a big no no.

[Rogue]

If I win the lottery I'm gonna PEEM Froz' before I do anything else.

In the meantime I only have one question...
Cash option or annual payments?

[jk the sooner fan]

If I win the lottery I'm gonna PEEM Froz' before I do anything else.

In the meantime I only have one question...
Cash option or annual payments?

i've been told that it depends on what the winning amount is on whether to go cash or annual payments

i think if its a couple million, you take the cash.....if its the BIG ONE, you go with the annual payments

[OUHOMER]

Well, that answers my question. Thanks, that’s what I was looking for. I don’t want to be poor when I retire. So I will have it transferred to my new 401K or something like it

[Frozen Sooner]

If I win the lottery I'm gonna PEEM Froz' before I do anything else.

In the meantime I only have one question...
Cash option or annual payments?

:D

Depends on what kind of interest rate is assumed in the annuitization. I'll bet if you took the cash option you could negotiate a better rate on a SPIA than the lottery commission is going to give you. Plus, on the SPIA, you can set up a guarantee-term so that the annuity payments continue after your death.

[Frozen Sooner]

Well, that answers my question. Thanks, that’s what I was looking for. I don’t want to be poor when I retire. So I will have it transferred to my new 401K or something like it

You're welcome. Rereading that, it comes across (to me) as kind of snotty, so I apologize for the unintended tone. I know how tempting it can be to break open your piggy bank to pay off your debts.

[Vaevictis]

So If I can get debt free and triple my contributions to my new 401k, Start a Roth IRA. Would that not be the way to go?

Other point on the Roth IRA: Sometimes traditional IRAs are better, most often during your prime earning years when your tax rate is highest. If you think your tax rate is higher today than it is going to be when you retire, you might want to consider the traditional IRA.

A lot of people jump on the Roth IRA because of the promise of no future taxes (having a philosophical hard on for that sort of thing), but remember that it's about how much money you get to keep in the end, not sticking it to Uncle Sam.

[OUHOMER]

You're welcome. Rereading that, it comes across (to me) as kind of snotty, so I apologize for the unintended tone. I know how tempting it can be to break open your piggy bank to pay off your debts.

I appreciate the advise, It didn't sound snotty to me. Straight and to the point, thats the way i like it. Thanks again