Should I cash out on my 401k?

Question

I have a 401k from my previous job and its about $1,500 and I dont know if to cash out. Please help

Answer 1

Absolutely not.  There is NEVER a logical reason to cash-out a 401(k) before you reach age 59 1/2, if you do, you lose about half to taxes & penalties.  

Answer 2

Avoid the penalties and stay in. That is if you still plan on making contributions and if they are matched. If it is just sitting there dead in the water I would say take out the money. You will probably end up with about 1k of the original amount.

Answer 3

A much better plan is to log on to Fidelity or E*trade,Scottrade....and fill out an application to " roll-over" the 401 into a ROTH IRA...

You MAY have to pay a tad in taxes...but it's just a GREAT place to put some " found money"...get it in, pick a fund and let it sit..."let it ride"... it will roll up money for you that you can someday get as TAX-FREE income ( The three most sensible words you will ever come across.)

After you have it for awhile and you see how it's doing, you may even be tempted to ADD to it yearly... just so you know...IF you add...and IF it's the max. ( $ 6000. next year)..and IF you manage that every year..and IF you are younger than 30.....you would end up with over a million at 60.

Answer 4

The question becomes, how much will you pay in tax and penalty?

Answer 5

No...don't cash-in... I don't know if you' ll make a million out of it or whatever...just roll it into the IRA ( somebody already mentioned)...ROTH you would have to pay some taxes...but you could also just go into a " traditional"...no taxes... and fuggedabowtit !!...let it make money for you...FOR YEARS... if you add to it or if you don't...it's always there...chip, chip, chipping in...

If you cash- in, you probably " blow" about 30% in taxes...then spend half of what's left on something you REALLY don't need...but if you let it ride...it will be a nice, nice bundle for you someday and could really take care of some major expense when you're 60. You won't miss it now...and it could be a " godsend" then !!