The company is closing, I'm over 55 and will be able to avoid the 10% penalty when the 401k plan ends. i am fully vested. Understand the state and federal tax implications. Not unemployed and not sure how long that will last. If I roll over to IRA, I can't get access to the money until at least 59.5, but, I may need it soon. What would your advice be regarding taking a sufficient mount of cash out, incurring the approximately 27% tax bite, and paying off credit cards, department store cards, other loans etc that carry approximately 10% interest rates, in order to reduce monthly expenses while job searching? What about existing car loans at 3% vs investing the money in a well balanced mutual fund earning higher than 3% and paying those low interest liabilities out of the working mutual fund?

talaniman

I believe you can roll over the entire amount wthout penalty if you put it into something like a roth or some other fund within 60 days.You didn't say if your're retired or not,but with a fully vested pension I certainly would.Your pension would carry you till you are employed again The decision to work or not work wouldn't be so urgent.Getting rid of high interest debt can open a whole new world as this is the key to retirement .I retired at age 48 by paying down all credit cards and high interest loans and just live within my means on my monthly pension check.Though I'm looking for a good job I'm in no particular hurry and I am enjoying mysef immencly.Go to your local bank and get the details about your rollover options and then see about paying down your debt.good luck!

talaniman

If you are fully vested why not take your pension,if your company is closing?

Fr_Chuck

If you really don't need the money, I would roll it over. There are Roth IRA's that do allow you to withdraw money for all sorts of emergancy reasons, plus allow low interst loans on the money if needed also.

I have two plans and both allow me to withdraw money ( now I pay the penalty if I do)

Remember IRA are all sorts, banks, insurance companies and other groups sell them, they are products and not all of them are the same.
I will say that it is not the highest paying one, but Woodsman has a very secure one that I like for part of my funds. I have others in higher risk investments

Fr_Chuck

I did forget, this is just personal opinion, a good investment planner would be the best bet to keep all the ideas. I would actually discuss this with three different ones, this allows you to see the different products and ideas.

Make sure whoever you talk to is licenced and/or bonded in thier field.

fredg

HI,
I went through the same thing, and had to retire at 63, due to health issues in my family.
Is the 401K plan in your name? In other words, do you HAVE to withdraw or roll it over when the company closes?
My own plan was mine, and when our company sold out, we could leave the money in the plan. I have withdrawn some, but still leave some in there.
IF you have to either withdraw the money, or roll it over, then that's another story, and other answers here are better than mine.
IF you can leave it where it is, then withdraw only what you need to "get back on your feet", and leave some until later. If you have the option to put the rest of it into something different than a "fixed" %, then choose a "Balanced Plan", equally of stocks, bonds, etc. It pays a little more interest.
Best of luck.