Thursday, March 06, 2014

Withdrawal from 401k Plan Decision

Withdrawal from 401k Plan is i know a horrible thing to do since I will only be getting some money after taxes and the entire withdrawal amount but as I'm still going for interviews (nothing heard back yet) and am not seeing too many job openings that apply to what my skills at the current time, I'm getting antsy!

On one hand, I want to take everything out (or most of it out if the plan allows me to) to pay off the current debt and have money left over to cover a few months expenses. On one hand, it's all the money that I have been socking away since I was 26, when i started contributing to retirement. The current balance of my 401K plan is at $151,000 (a few hundred more). Also, I have about $11,000 in a traditional IRA and Roth IRA. In addition, I have about $55,000 in my pension account, which i could leave in that account for annual pension payout of $16,000 per year when I retire (earliest retirement age is at 50 for this account). Or i can withdraw that money out. At age 36, I wish I am not faced with making these decisions since it will be hard to build up/make up any retirement withdrawals I make.

Currently, I'm leaning towards leaving my pension account alone...$16,000 per year guaranteed money when I retire is not great but it's better than nothing. I'm leaning towards withdrawing my 401k plan to pay off the debt...which means I might have to take out $100,000 to cover the taxes that will be taken out from the withdrawal amount. I will need at least $50,000 after taxes to pay off debt and to have some living expenses covered.

Either way, it's such a depressing decision. I will wait another month to see if I might get a comparable job by then since my tax refund will be covering April's mortgage. If not, I will just get any job and hopefully, will be enough pay to pay the mortgage, expenses, and minimum debt payments. R. is still in the process of being hired from his temporary position to a permanent position (pay will be the same but with benefits)...which means his monthly pay will be at least $300 less than currently (medical insurance for both me and him). But at least, there will be medical insurance available for us still. At least, that's something good.

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