Questions And Answers About Debt Reduction - Should I Cash Out My 401(k) To Pay Off Debt
Under most circumstances, if you cash out your 401(k), you will have to pay federal, state, and local income tax.
You will also owe an early withdrawal penalty - 10% - if you are under the age of 59 1/2.
In almost every case, for every $100 dollars you withdraw, you will pay between $25 and $50 dollars in taxes and penalties.
In other words, unless you are doing so to avoid bankruptcy, it’s a bad idea to cash out your 401(k) and pay off debt.
401 k, Bankruptcy, early withdrawal penalty, income tax, News, Pay Off Debt
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on Saturday, March 15th, 2008 at 12:11 pm and is filed under Pay Off Debt, Bankruptcy, News.
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