Posted on 11/10/2010 6:46:41 AM PST by CaptainKip
Soliciting opinions on if we're getting close enough to the time to take the penalty and tax hits and cash out my 401(K) at work to get whatever cash is left in my hand.
You can roll it into an IRA that can invest in real estate.
I have much in high-yield bond funds (12-20% so far this year, with a second chunk in a Precious Metals fund turning 10% per month. You can’t ignore your investments in your 401K and expect it to retain its value. When things started down in 2008, I liquidated to a cash fund until everything bottomed out, then went back in. Instead of losing a bunch, I’m up.
Bottom line is, don’t let someone else manage your account as it will be managed into the ditch. Be diligent and agressive.
Stop calling it the Bush tax cuts, start calling it the Obama tax increase.
The cardinal rule in investing is:
DON’T PANIC.
(Coincidently, that’s also the first rule given to travellers in The Hitchhiker’s Guide to the Galaxy.)
Cashing in a 401k before retirement is probably a really, really bad idea. The odds of armageddon happening in the next few years are pretty low. However, the taxes (between 15-35%, probably at the higher end) and penalties (another 20%) on withdrawal are dead certain and permanent.
Almost every 401k plan allows the individual participant to select mutual funds from a list of funds. So, you think Ben B and Timmy G are going to wreck the US$? Then get out of the bond (AKA, fixed income) funds and re-allocate something like 50-50 to the international equity fund and the money market fund. If you have options for an international bond fund or an inflation-protection fund, include those also. It’s unlikely that a 401k would have a fund concentrating in mining, petroleum or natural resources, but that pick would also be an obvious candidate. If Ben B and Timmy G successfully ruin the US$, the international funds get currency protection and the US$ MMF eventually gets a higher short term interest rate. It’s highly unlikely that Ben B and Timmy G will do as much damage to your 401k’s value as you would by cashing it in.
DON’T PANIC! Just be sure to get out of any fund that has the words “intermediate bond”, “long term bond”, “fixed income”, or “20xx target” if you have concerns about the competence of the ruling elite.
Think it all the way through---
Just sayin'
This advice would heavily depend on whether you believe there is actually a future for the dollar.
I see evidence starting to mount that the govt is trying to murder the dollar. Upwards of 2 trillion dollars getting printed. Stories in the wsj that the govt is lying about our debt that's actually on the order of 200 to 600 trillion dollars that's IMPOSSIBLE to repay. Stories about govt confiscating private retirement accts.
They WILL destroy your savings so your options are
1. Let them make it worthless.
2. Let them confiscate it.
3. Cash out, pay your fine and have at whatever is left in your hot little hands do with what YOU choose.
I'm choosing 3. Just trying to work up the gumption to have the argument with my broker guy.
But what would you do with the left over?
If your plan allows a non-hardship early withdrawal, roll it into an IRA and invest as you see fit. If not, you are crazy to do cash it out. Heck, if you are that determined quit, roll over your 401(k) and re-apply for your job.
Wondering when/if the government will nationalize 401(k)? I am.
IMO your sentiment is correct but your concerns are wrongly prioritized. If we get to the situation where the govt confiscates our 401K’s then our country is over.
I think you're assuming that there either wont be another election or RINOs will stand against it. I dunno about you but my experience with all the claims of Conservatives dominating for any stretch of time and/or conservatives governing as such have been myths perpetrated by idiots and the gullible.
You should discuss your situation with a financial advisor, not strangers (albeit well-meaning) on an anonymous web forum.
Many will provide a free consulrtion. It can only give you more information and options.
Imagine what the Stock Market would be like if it didnt have all the monthy 401K contributions.
Good or Bad I dont know. . .
You may be correct.
You may also be wrong.
I am certain there is a course of action an individual can take that will guide them through this coming economic storm but I don’t know what it is. Personally I do not belive anyone can predict what is going to happen since we never know all the variables.
Interesting math skills you have there!
Quit or get fired from your job, take the 401k distribution and roll it over to a Roth IRA and the taxes on the conversion can be delayed a couple of years (Congress could extend it passed this tax season) or roll over to a regular IRA and begin transferring to a Roth account later.
Then get rehired and stop making contribution to any 401k plans.
If a Roth-401k company plan is available, move into it.
Can’t do any of the above then take loans out on the existing 401k and start a IRA or Roth IRA with the money and cease regular contributions to the 401k. When the loan money is paid back to the 401k plan, get another loan and do it all over again.
We felt the same way. Flipped it into a Roth IRA, pay the taxes over 3 years, but must occur this year for that advantage.
I swear my email came first ping
I PRAY I’m wrong, but I’m not betting my retirement savings on giving the benefit of the doubt to ANY politician. I consider today’s politician synonymous to thief, rapist, murderer and child molester.
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