401k question

You could look at taking it out over a couple or a few years to reduce tax hit if your income is going to drop like that, or if it will be your only income.

And look at a hardship exemption.

I certainly pay taxes every year, quite a lot of them. Between employment taxes the company matches, and income taxes, it's a tidy mid 5 figure sum.

If your paying 20% interest on anything your a fool. Personally the only debt I have at all are 2 mortgage loans at current low rates, 4.2% for the largest one, and I typically do well enough with my 401k, tax deferral, matching funds and growth to make it worth my while to not cash in my 401k to pay them down.

No credit cards, no car payments, no debt but mortgage.

I posted earlier up the OP needs to do the math on what taxes and penalties it will cost to pull the money out and determine how he will fare vs interest saved if he pays debt off etc. It does make better sense to pay off the debt for a lot of people. Probably will make sense to pay off my mortgages in a couple of years as well.

Thank you very much! I will let her know so she can be more prepared when she makes her calls. Always better to be more informed when asking questions.

__________________
Idleness is leisure gone to seed

to the OP
If you have complete and undying faith in the J. Wellington Wimpy Theory of Economics (I'll gladly pay you Tuesday for a hamburger today), I'd say stay with your 401k.

Luckily, you only have two years of "unwiseness" (not nice to say foolishness) invested. Sounds like you're coming to your senses, and are ready to get your dimes on the dollar back. Sure beats hanging on to them, and later on, if the wise and benevolent government doesn't see fit to sieze ALL 401K plans (everyone's surely heard of the plans for seizing them, right? If you haven't, I'd do some lookin' and listenin'), to get pennies back on the dollar.

There are many investment vehicles out there. Sure there are some inflation/depression/stagflation proof companies out there. If one were to invest, it'd be best to invest in those... (methinks companies providing vices would be a good bet... alcohol, drugs, healthcare {unless the progressives ban profits})

There's also land. The rawer the better. The further away from population centers the better. My last land purchase has appreciated ten fold in 13 years. And, 50% of the original purchase price was 'refunded' through a pine thinning.

Good luck, and hope you get your land... and don't lose everything to the tax-man...

__________________
Luck is what happens when preparation meets opportunity. Seneca
Learning is not compulsory... neither is survival. W. Edwards Deming

StartupMan -

I would also HIGHLY recommend that any business ventures you have rolling around in your head be started the year that you will have your highest income. Look at the various ownership /formation options for the business, but select one that has the profit/loss roll over to you as an individual. And then expense everything you (legally) can (it will be a TON, even for a very small home-based business). The loss that year will directly (dollar for dollar) reduce your income from other sources (including liquidated 401k funds), which obviously reduces your tax liability (although it won't impact your penalties for the 401k). If you file your taxes jointly with a spouse, any business your spouse operates during the year will have the same impact on your joint income - profit would raise your income, and losses will lower your income.

Food for thought! And if I get time, I will find the link to that IRS publication. It's short and clear and very idea-promoting!

GOOD LUCK and way to go on NOT having a mortgage! I think you're on the right track!

MouseBandit

Thanks mousebandit, I hope you find the IRS publication too.

Here's the link. It's IRS Publication #575 and this link is to download the pdf of it.

http://www.irs.gov/pub/irs-pdf/p575.pdf

Good luck!

MouseBandit

Thanks mousebandit