Last year I left my job with $17k in my 401k. I want to re-fi my house which will save me over $11k over the life of the loan, pay off some credit cards and have hard cash on hand. I know I will take a hit on the penalties, taxes and maybe capital gains taxes however, with a newly elected President wanting actual working people to pay for the welfare masses and all his projects, I may end up with less if I wait until 2009 and the new tax plan, what are your thoughts?


>Moved from Forum Help<

My thoughts are you should plan on waiting until you reach at least age 59-1/2 before you cash out your 401(k).

If possible, re-fi your house and pull cash out to pay off your credit cards. This lowers your interest rate, and makes it tax deductable (assuming this is for your primary residence).

Then cut up your credit cards and don't touch your 401(k).

In the worst case scenario, I would pull out enough cash from the 401k to cover the closing costs of the loan.

I would take out only enough from the 401k to refinance and that's it. The penalty on early withdrawal of a 401k is so high, I would rather pay the interest on the credit cards. But if it was me, I would get a weekend bar tending job or something to help work through those credit cards as soon as possible. Paying that kind of interest makes it difficult to prosper.