Jump to content

What are the good, the bad, the ugly points of using $ from 401K for settlements?


seekingpeace
 Share

Recommended Posts

I guess I stupidly thought we could take our money out of our 401K to do what we want. I've never considered taking any of the small amount out until now. I don't want to do a loan as payments are what we're having trouble with now. How hard is it to do the financial hardship route? How long does it take to get the money? I do realize a lot of taxes are taken out. Do you choose to have those taken out now or later? Thanks for any help!

Link to comment
Share on other sites

OK here's one...

1. Tax consideration... expect to be hit with an immediate 10% penalty on the amount your remove and you will have to report this on your income tax return and pay income tax on it. For example, if you take out $1k, you will have $100 withheld and sent to the IRS and will need to report the entire $1k as ordinary income.

Link to comment
Share on other sites

My mother had to use her 401k to keep her house from foreclosure ( she moved back to TX and it took two years to sale her Virginia house). She ended up owing the IRS 13,000...she had to pay it over 3 years.

She said it was the wrong thing to do...she now has next to nothing in retirement

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.. For more information, please see our Privacy Policy and Terms of Use.