I cashed out all of my retirement accounts early. If you don't own your money free and clear, then you DON'T own it! Period! Anyway, had I left it in there, I would have still been down more than the 10% penalty over the past 2 years.
Some of the best investment advice I ever received was to never make financial decision solely based on tax reasons. If the fundamental reasons for making the switch in your investing strategy is sound, the 10% hit will be a drop in the bucket.
If you don't want to take the 10% hit, you can reallocate to less volatile assets and quit contributing.
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Our monetary system has been hijacked by morons! Abandon ship!!!!
Liquidated my IRA's in early 2010 and put it into physical PM's. The tax bite did not bother me because of my belief of severe $ devaluation, mistrust of our current financial and political systems, near certain tax increases, and the recognition that today is a totally different animal than the past 40 years.
Right now I am struggling with the same decision for my kids college fund. I'll probably pull the trigger on those with the same plan within the next few days.
sorry to bump this thread, but it was recommended to me as i am trying to figure out what to do with my 401k.
it isnt a huge amount, and i have moved it into a self manage schwab account. the plan was to buy energy and commodities as i think the dollar will continue to be devalued, but now i see i can take a loan out from it.
i havent heard about taking a loan out against a 401k, so i will have to do some reading on it, but in general, is there a reason this isnt done very often?
it would seem that paying the interest would be cheaper that paying the taxes + 10% penalty, but im not sure how taking a loan against a 401k is any different that getting any other loan.
UPDATE: Thanks to everyone that contributed to this tread as I was finally able to come to a decision. Approximately 3 weeks, ago my wife started a new job and I used this as an opportunity to close out her 401k. I immediately took the balance and purchased a nice stack of gold eagles. This was a decision that took me a couple of month to arrive at, but ultimately I have a huge sense of relief that her money is no longer hostage to the rigged casino in New York. It brings true piece of mind to know that we are in possession of the money that she had worked so hard to save.
As many have already stated, closing your 401k is only an option of you switch jobs or quit you job so it is not an option for everyone. The 401k loan is probably the best alternative. We started taking the max allowed loan on our 401k's back in 2009 and buying physical silver at about $15/oz. If you do not plan on leaving your job and feel as though you have some stability, the loan is a win/win. You can take the loan, invest in PM's and pay yourself back with interest (a whopping 4%). Granted you have to pay back the full balance of the loan if you lose / switch jobs, but at that point you can finally close out the whole thing anyway. It made sense for us, but do you own DD and understand your plan rules before pulling the trigger.
Ultimately, I felt as though the 401k was a money trap, especially for those who have a closed selection of funds. I have no doubts that any tax penalty incurred as a result of abandoning the 401k will pale in comparison to the amount capital we have been able to preserve by moving that money in physical PM's.
Have had much of my 401k balance sitting in cash since the 2008 crash. In and out of selected investments (can trade pretty much anything except complex options and futures).
Went for the maximum loan and reduced my contributions to the minimum that would still capture the maximum match from my employer, if that makes sense. Loan is paid back to 'me' at ~4.5%. With the reduction in contribution and deleveraging out of other debt, it's a wash in take home pay. Non-taxable (doesn't count as 'income', no penalties) event, and the kicker, not reported to the credit agencies.
The 529 account (college savings for the kid) is an even worse situation.
—
"When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it." - Frederic Bastiat http://en.wikiquote.org/wiki/Fr%C3%A9d%C3%A9ric_Bastiat
I cashed out all of my
I cashed out all of my retirement accounts early. If you don't own your money free and clear, then you DON'T own it! Period! Anyway, had I left it in there, I would have still been down more than the 10% penalty over the past 2 years.
Some of the best investment advice I ever received was to never make financial decision solely based on tax reasons. If the fundamental reasons for making the switch in your investing strategy is sound, the 10% hit will be a drop in the bucket.
If you don't want to take the 10% hit, you can reallocate to less volatile assets and quit contributing.
I cashed out my spouse's IRA
I cashed out my spouse's IRA in 2010, and paid the penalties for it in 2011. I got some of the shiny objects back in 2010 before the prices increased.
I repeated the above this year with my own IRA. I had to pay the 10% IRS penalty along with regular income taxes on the withdrawal.
I believe that my decision was a good one.
Liquidated my IRA's in early
Liquidated my IRA's in early 2010 and put it into physical PM's. The tax bite did not bother me because of my belief of severe $ devaluation, mistrust of our current financial and political systems, near certain tax increases, and the recognition that today is a totally different animal than the past 40 years.
Right now I am struggling with the same decision for my kids college fund. I'll probably pull the trigger on those with the same plan within the next few days.
sorry to bump this thread,
sorry to bump this thread, but it was recommended to me as i am trying to figure out what to do with my 401k.
it isnt a huge amount, and i have moved it into a self manage schwab account. the plan was to buy energy and commodities as i think the dollar will continue to be devalued, but now i see i can take a loan out from it.
i havent heard about taking a loan out against a 401k, so i will have to do some reading on it, but in general, is there a reason this isnt done very often?
it would seem that paying the interest would be cheaper that paying the taxes + 10% penalty, but im not sure how taking a loan against a 401k is any different that getting any other loan.
Pulled the trigger....killed the 401k
UPDATE: Thanks to everyone that contributed to this tread as I was finally able to come to a decision. Approximately 3 weeks, ago my wife started a new job and I used this as an opportunity to close out her 401k. I immediately took the balance and purchased a nice stack of gold eagles. This was a decision that took me a couple of month to arrive at, but ultimately I have a huge sense of relief that her money is no longer hostage to the rigged casino in New York. It brings true piece of mind to know that we are in possession of the money that she had worked so hard to save.
As many have already stated, closing your 401k is only an option of you switch jobs or quit you job so it is not an option for everyone. The 401k loan is probably the best alternative. We started taking the max allowed loan on our 401k's back in 2009 and buying physical silver at about $15/oz. If you do not plan on leaving your job and feel as though you have some stability, the loan is a win/win. You can take the loan, invest in PM's and pay yourself back with interest (a whopping 4%). Granted you have to pay back the full balance of the loan if you lose / switch jobs, but at that point you can finally close out the whole thing anyway. It made sense for us, but do you own DD and understand your plan rules before pulling the trigger.
Ultimately, I felt as though the 401k was a money trap, especially for those who have a closed selection of funds. I have no doubts that any tax penalty incurred as a result of abandoning the 401k will pale in comparison to the amount capital we have been able to preserve by moving that money in physical PM's.
Good luck to all!
+1 on the loan BossHogg
Have had much of my 401k balance sitting in cash since the 2008 crash. In and out of selected investments (can trade pretty much anything except complex options and futures).
Went for the maximum loan and reduced my contributions to the minimum that would still capture the maximum match from my employer, if that makes sense. Loan is paid back to 'me' at ~4.5%. With the reduction in contribution and deleveraging out of other debt, it's a wash in take home pay. Non-taxable (doesn't count as 'income', no penalties) event, and the kicker, not reported to the credit agencies.
The 529 account (college savings for the kid) is an even worse situation.