Debt Consolidation Forums Budgeting and Personal Finance forums

Should I cash out my 401k or take out a loan?

member profile picture
Posts: 1
Credits: 19.8
[Donate]

I have been contributing to 401k account. But, I am experiencing some financial emergency. Should I cash out my 401k or take out a loan?




"It sometimes seems easy solution to cash out your 401(k) to solve a financial emergency.

However, think before doing that.

There are some consequences to withdraw your 401(k) before 591/2 years of age:
You may have to pay 10%early withdrawal penalty
You have to pay federal income tax"

Sub: #1 posted on Tue, 06/07/2016 - 10:10

phoenix phoenix
Moderators
(Posts: 1444 | Credits: 275.38)

You can, but you shouldn’t do it because it’s a bad financial idea. Once you cash out from your 401 (k), it's gone and it will be difficult to replace it with other savings. However, if you are under 59 ½ years, then you have to give 10% early withdrawal penalty along with tax charge.

If you’re above 59 and facing the worst financial phase like credit card debt and you’re thinking to cash out from your 401 (k) to resolve the issue, then I would like to suggest taking out a loan is a better option than eating all the savings. But, you have to cross the age limit, and understand the terms of the loan before making any final decision. I would like to suggest you to talk to a financial advisor in person regarding the matter.

Sub: #2 posted on Wed, 06/22/2016 - 18:07

sanderspatricia29 sanderspatricia29

(Posts: 319 | Credits: 37.4)

Attachment
More information
  • Files must be less than 1.25 GB.
  • Allowed file types: txt pdf jpg jpeg png.
Post as a guest
CAPTCHA
This question (Case Insensitive) is for testing whether you are a human visitor and to prevent automated spam submissions.
Image CAPTCHA
Post as a member

Share post

Page loaded in 0.805 seconds.