Cash out 401k or reinvest?

[mozirry]

Just left my job and I don't have the option of leaving it in the 401k because it isn't enough $. It's about $1.5k and half of that is employer contribution. Only options are to cash out or put it in a roth ira

I don't really need the money but if I take it out I wanted to use it to get a plumber to come out and dig in a toilet drain in our basement next to our main stack.

So it would "technically" be reinvested into the value of our home but obviously the taxes are going to suck.

Would have to pay 10% penalty and then pay income taxes on it, so something like 20% total.

I don't know much about roth ira's but it sounds like they aren't that great either since I still will have to report the money as income?

 

[MikeyIs4Dcats]

roll it over, otherwise you'll lose half to taxes.

 

[Capt Caveman]

Roll it over, cashing it out is stupid.

 

[mozirry]

Originally posted by: Capt Caveman
Roll it over, cashing it out is stupid.

yeah, to a certain extent.

 

[MikeyIs4Dcats]

Originally posted by: mozirry

Originally posted by: Capt Caveman
Roll it over, cashing it out is stupid.

yeah, to a certain extent.

no, to every extent, unless you NEED the money to eat or pay the rent.

 

[mozirry]

Originally posted by: MikeyIs4Dcats

Originally posted by: mozirry

Originally posted by: Capt Caveman
Roll it over, cashing it out is stupid.

yeah, to a certain extent.

no, to every extent, unless you NEED the money to eat or pay the rent.

I'm not sure if I made my initial situation clear, contributions to a Roth IRA are not tax-deductible according to what has been told to me so that's why I'm debating just taking the $ and putting it towards something I'm paying for anyway.

Technically I have no choice but to cash out of my 401k, the only question is if I take that $ and throw it back onto the market or put it to some good current use.

I probably will put it in the roth IRA option because I don't need it to eat or pay rent, but at the same time I really don't need this money saved...now...

Another enticing option is to use it to help pay off wife's car loan that has a very high interest rate

 

[Deeko]

Why can't you roll it into a new plan? Cashing out right now would be a terrible idea.

 

[mozirry]

Originally posted by: Deeko
Why can't you roll it into a new plan? Cashing out right now would be a terrible idea.

it has to be 5k or over =(

I'm still looking into it because I think it's crap but that is the jist of it at this point

 

[mozirry]

ahh problem solved, It's not that I HAVE to cash out if it's under 5k, its just that I can't leave it in the same 401k.

I have the option of a direct rollover into an IRA or other qualified plan (including another 401k plan).

=D

 

[FelixDeCat]

Been there done that. Took a six figure distribution. I was figuring I would write covered calls on an ultra long ETF and make about $13,000 a month, and scale up to $30,000 a month in a year. I have level 4 option capability, so I could sell the underlying security at anytime if it fell too far too fast. Ive been trading for than a decade.

This multiheaded dragon was one complicated beast to control. So many factors. So many variables. So many moving parts. So many risky decisions to make. Made good money for awhile ... then greed got the better of me. I had to seriously cut back on the risk/reward ratio, especially after the market tanked almost 50% last year at one point. Throw in 2x returns and you see what Im talking about. I actually dont make the market my priority anymore.

Now its time to settle up with Uncle Sugar. Im going to file as a trading company.

 

[thomsbrain]

If you believe it's really smart to buy high and sell low, then sure, cash it out now.

 

[dirtboy]

Originally posted by: mozirry
Would have to pay 10% penalty and then pay income taxes on it, so something like 20% total.

Your tax rate is only 10%?

Hell might as well withdraw it.

 

[woodie1]

I'd roll it into an IRA or even a Roth IRA if your tax rate is real low.

 

[Special K]

Originally posted by: FelixDeKat
Been there done that. Took a six figure distribution. I was figuring I would write covered calls on an ultra long ETF and make about $13,000 a month, and scale up to $30,000 a month in a year. I have level 4 option capability, so I could sell the underlying security at anytime if it fell too far too fast. Ive been trading for than a decade.

This multiheaded dragon was one complicated beast to control. So many factors. So many variables. So many moving parts. So many risky decisions to make. Made good money for awhile ... then greed got the better of me. I had to seriously cut back on the risk/reward ratio, especially after the market tanked almost 50% last year at one point. Throw in 2x returns and you see what Im talking about. I actually dont make the market my priority anymore.

Now its time to settle up with Uncle Sugar. Im going to file as a trading company.

😕

The guy is just asking about rolling over a small 401k and you give him 2 paragraphs of technical trading lingo?