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OfflineMush4Brains
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Registered: 07/31/13
Posts: 4,419
Last seen: 9 years, 2 months
Cashing out a Roth 401k?
    #18948035 - 10/08/13 03:13 AM (10 years, 3 months ago)

So I quit my old job (3 months ago) after graduating college and am in a pinch for money.  It's at around $1400 and I was wondering what the pros/cons or even if I can cash it out at this point?  If I can, can I pay the penalty and taxes up front so what I get I don't have to worry about on my tax returns?  I would love to get like $800 out of it so I can move across the country to where my field of study has more opportunity.


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InvisibleLunarEclipse
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Registered: 10/31/04
Posts: 21,407
Loc: Building 7
Re: Cashing out a Roth 401k? [Re: Mush4Brains]
    #18969025 - 10/12/13 04:38 PM (10 years, 3 months ago)

Quote:

Mush4Brains said:
So I quit my old job (3 months ago) after graduating college and am in a pinch for money.  It's at around $1400 and I was wondering what the pros/cons or even if I can cash it out at this point?  If I can, can I pay the penalty and taxes up front so what I get I don't have to worry about on my tax returns?  I would love to get like $800 out of it so I can move across the country to where my field of study has more opportunity.




Roth IRAs

Roth IRAs withdrawals are hit with a 10% penalty if you cash in before age 59½ and lose itheir tax-free status. However, there are ways to get money out of a Roth tax- and penalty-free.

You can reclaim contributions at any time and at any age, without fear. Only earnings are subject to penalties. And Congress said that the first money coming out of Roth IRAs will be considered contributions.

But, money that is converted to a Roth must generally stay in the account long enough to meet the five-year test -- that is, for four calendar years after the year of the conversion -- to avoid the 10% penalty.

Read more at http://www.kiplinger.com/article/retirement/T035-C000-S001-cashing-out-early.html#MwcFl3pX9AC109Vd.99


--------------------
Anxiety is what you make it.


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OfflineMush4Brains
LOOL HACKED!!!

Registered: 07/31/13
Posts: 4,419
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Re: Cashing out a Roth 401k? [Re: LunarEclipse]
    #18969151 - 10/12/13 05:20 PM (10 years, 3 months ago)

401k, not IRA. Thank you though.

I'm just going to contact the company that runs the 401k and see what they say.


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Offlinejonathanseagull
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Registered: 10/28/05
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Re: Cashing out a Roth 401k? [Re: Mush4Brains]
    #19039576 - 10/27/13 07:36 AM (10 years, 3 months ago)

Many moons ago, I did the same thing.  I cashed out about $1800 in a 401(k) and took the penalty.  I don't remember what I was left with but the penalty ended up being pretty hefty.  You pay the penalty and then taxes as well. 

However, to give you some confidence, I reinvested that money in my personal business I was starting, and now I'm earning twice the average wages in my state from my living room, all online.  I sleep, eat, wake up, go to bed, have days off, whatever... whenever I want. 

If you cash out and take a nice calculated risk with a real plan, you are going to earn more cash back with that money then it was going to earn you sitting there, barely making up for inflation.

:smile:


--------------------
Loving in truth, and fain in verse my love to show, That the dear She might take some pleasure of my pain: Pleasure might cause her read, reading might make her know, Knowledge might pity win, and pity grace obtain.


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OfflineTsukasa
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Registered: 11/10/12
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Re: Cashing out a Roth 401k? [Re: Mush4Brains]
    #19040098 - 10/27/13 10:27 AM (10 years, 3 months ago)

Quote:

Mush4Brains said:
So I quit my old job (3 months ago) after graduating college and am in a pinch for money.  It's at around $1400 and I was wondering what the pros/cons or even if I can cash it out at this point?  If I can, can I pay the penalty and taxes up front so what I get I don't have to worry about on my tax returns?  I would love to get like $800 out of it so I can move across the country to where my field of study has more opportunity.



I don't bother with putting my money in a bank or a plan... One day it wont even be there to begin with. Bankers are crooked as fuck. I got my shit in a safe.


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OfflinePDU
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Re: Cashing out a Roth 401k? [Re: Tsukasa]
    #19042607 - 10/27/13 08:34 PM (10 years, 3 months ago)

Inflation will kill you.


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GO OUTSIDE.


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Offlinejonathanseagull
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Registered: 10/28/05
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Re: Cashing out a Roth 401k? [Re: Tsukasa]
    #19043342 - 10/27/13 11:21 PM (10 years, 3 months ago)

Quote:

TriGeoLight said:
Quote:

Mush4Brains said:
So I quit my old job (3 months ago) after graduating college and am in a pinch for money.  It's at around $1400 and I was wondering what the pros/cons or even if I can cash it out at this point?  If I can, can I pay the penalty and taxes up front so what I get I don't have to worry about on my tax returns?  I would love to get like $800 out of it so I can move across the country to where my field of study has more opportunity.



I don't bother with putting my money in a bank or a plan... One day it wont even be there to begin with. Bankers are crooked as fuck. I got my shit in a safe.




Yeah, I understand that worldview and definitely think keeping some cash on hand is a good idea.  But if you don't have your money out there working for you to make more money, then you are losing money every moment to inflation.  You could at least slap your money into tons of varying ages of C.D.'s so you'll have some reasonable level of access to your money and at least keep up with inflation.

That was my point above, I guess.  Even though I was making more money by having my money in a 401(k), I got an INFINITE increase in ROI by investing the money myself into my own ventures. 

Cash flow is King and if you have the brain to handle it, you'll do nothing but grow more and more wealthy.  Don't let someone else handle your financial destiny.  That's what a 401(k) is, essentially.  It's resolving yourself to trust some knuckleheads and some system to at least get you a minimal return so you might retire one day.  9-5'ers use 401(k)'s and are hourly and salary wage-slaves.  Entrepreneurs rake it in, employ the 9-5'ers, pay them very little of their true value (9-5'ers fault), and then take those insane earnings and double, triple, and quadruple it day in and day out.

It's not an evil system.  It's about initiative.

Don't let your money sit in a vault, is what I'm saying.  It's a tool to use, not a safety net to hoard.  It'll never grow in a safe.  You might add more, but if you send it out there, it'll make babies and then you'll have babies making babies, and then you won't have money woes any more.


--------------------
Loving in truth, and fain in verse my love to show, That the dear She might take some pleasure of my pain: Pleasure might cause her read, reading might make her know, Knowledge might pity win, and pity grace obtain.


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