My husband is switching jobs and we do not know which route to take for his 401k
He has 30,000.00 in 401k
Do we roll it into a cd or ira ?If so can we withdrawl out of the cd or ira without paying federal or state income taxes on it or should we just withdraw it straight out of the 401k.
We want to pay off some notes .
Thanks :confused:

If you do not either leave it in the 401K if possible, or if you do not roll it over into another IRA or 401K, you will pay not only state and federal taxes but also pay a 10 percent fee for taking it out.

You can roll it over into another qualified plan with no loss.
But depending on your tax status you would be paying out at least 10,000 of it if you put it into a CD in taxes and penalties.

What is the interest rate on those notes? Look at it this way. Lets say the interest is 10%. Lets say also that your 401K generrally earns a 7.5% yield.

Now if you take out the $30K, you lose around $10K of it in taxes and penalties ($3k in penalties, $6K in taxes). Will paying the notes save you more that that?

Taking it out the 401K is really NOT a good idea. Your best bet is to roll it over into the new job's plan.

Roll the money into a rollover IRA with one of the big brokerage firms (I prefer Charles Schwab, but ScottTrade and Fidelity are just fine as well).

Once the rollover is complete, you have a vast choice of where you can invest the money (CDs, stocks, bonds, mutual funds, whatever).

Do the rollover from custodian-to-custodian (the brokerage house will help with the process). That way, NO taxes will be due and YOU will have control of the money and HOW to invest it.