I am in debt and must get a new job to stay out of major problems to tap the 401k account. I have a healthy 401k at $112,000 and can't take a loan from it. Talked to the plan administrator alread. They only loan money I can take on my plan is what I put in individually which at this point is nothing. I have outstanding loan amounts of $13,400 that I am paying back. How much money will I get after penalty and taxes? I am under 59 1/2. If I put this into a rollover IRA after leaving job will I be able to take the whole amount out? I need it all. I have a job lined up and want to make sure that the salary is enough to get me completely out of credit card debt for good and pay all the bills.

Do NOT take out 401K money to pay off credit card bills. The taxes will eat you alive.

Better to go on a repayment plan with a consumer debt agency or, delcare bankruptcy. That way, the credit card debt is forgiven and the 401K money IS PROTECTED from your creditors.

If you take the 401 money early, expect to pay AT LEAST 25% in taxes, and perhaps as much as 45%.

Appreciate the advice. I really don't want to go bankruptcy to lose my house and I looked into the consumer debt agencies as they are not going to be able to reduce me that much. They advertise 50% savings but you become late on your payments as they don't pay right away. This throws you in to possibility of getting sued by the creditors as it looks like you aren't paying at all.

I understand the tax consequences and planned on a minimum of probably 35% to 40% plus starting over on my 401k which would take care of all debt and get me back to saving money. My plan takes 20% fed tax right off the bat and then I would have to handle the 10% penalty at tax time and the additional income tax which I am going to hold money back to pay. I guess my option of losing everything or starting over on retirement savings is the decision.

That will NOT be a problem if you go to the Consumer Credit Counselling Services. They are NOT the rip-off artists that the agencies that advertise are.

Early withdrawal from 401K is subject to 10% penalty plus the withdrawal is taxed as your normal income.

If you want to throw away money, please throw some my way. You are talking about throwing away $50K or more. Do you have any equity in yiour house? Bankruptcy doesn't necessarily mean losing the house. If your 401K net will pay off your debt, that means you have about $60K. That's not going to cost you the $50K the 401K distribution will. And that doesn't factor in loss of investment income.

I don't have any equity in the house as I refinanced over a year ago. We made some bad investments and now I am in debt over 60k. I know the options but I don't want bankruptcy on my credit report for 10 years. All your advice in saving money is valid. I want to try to do this without losing the house or bankruptcy that is why I was looking at my 401k. I have some savings to last for a while but paying the minimums is killing me.

How do I do bankruptcy without losing the house? From what I read everyone needs to be paid. Can I only discharge the credit cards with bankruptcy? I thought I had to sell all assets to pay off debtors? I can pay the mortgage and never have been late.

Its my understanding that a bankruptcy doesn't force you out of your home. But I'm not a real expert on the finer points of bankruptcy. I suggest you discuss this with a bankruptcy atty. Most will give a free consultation.

Agrred; g see a bankruptcy attorney.

But I believe the house will be proteced in the bankruptcy process.