Liquidating a 401k

31 Jan

And although 401k is not a savings account, more and more people are turning to it, requesting a 401k hardship loan.

However, there are some important considerations that need to be addressed.

If any part of the withdrawal is due to after-tax money that you invested, this will reduce the taxable portion.

However, the tax implications of liquidating your IRA depends on whether you have a traditional or Roth IRA and whether your distribution is qualified.

A tax professional may also be able to help you estimate the full amount of the tax that you may owe so that you can send in an estimated payment or place the funds in a safe account until it is time to pay the tax bill in order to reduce the odds of your having interest and penalties added to your tax bill later on!

I have worked for the same bank for 15 years as a mortgage originator.

The money you are saving today will be valuable in the years you won’t be able to work anymore.

If in the future, you get sick and you cannot work past a certain age, you will need this money to fall back on.