[wtc911]

Would it make sense to empty out one’s 401K to pay down debt, if this thing gets passed, or before? I know most people say that’s a no-no, but if the money’s going to be stolen anyway...

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Plenty of time to act before anything like this could ever become law.

That said, how old are you? You will take a 10% hit if you are younger than 59.5 years (on top of income tax).

How much debt do you have and what kind? Paying off a mortgage might make sense if you could pay it all. Then you'd have extra cash every month, but where would you put it?

Does your debt exceed your 401k/IRA holdings?

If you decide to do it get it done this year. Next year the taxes on all income (including unearned income) will rise.

[LongElegantLegs]

I’m in my twenties; Hubby (the worker) early thirties.

Our only debt is credit card and vehicles; under 10k, altogether. We could pay off about 60% with what’s in our 401k(not accounting for extra taxes or penalties). If we did that, we could pay off the remaining 40% in a few months.

Thanks!

[cherry]

by "plenty of time" what do you mean....my husband can take out his meager 401 in about 1 1/2yrs without penalty...I'll have to wait to 2012...

and you're right.....where do you put it then....if you have it lying around in a bank account, I think the govt could come after you to pay for your "excess" medical insurance or bills....

people used to think that elderly sick parents could "gift" all their money to their children so they could get into Medicaid for nursing home care, etc....but the govt now comes after that money even if the parents gave it away 2 yrs earlier....

nursing homes could drain a $100,000 rather easily...

we're doomed...(buy antiques and precious numismatic coins I guess that can't be traced.)