I am changing jobs and I was wondering if I should cash out my 401k. I know about all the penalties involved. I have $6000.00 in my job sponsored 401k and I was wondering how much I will get of that $6000.00 after the taxes and penalties. I have over $5000.00 in credit card debt and whatever I get back will go to that. I normally wouldn't think about cashing a 401k out but I will now be driving 120 miles a day until I move, and reducing my debt will be a big help in lowering my minimum payment each month.


Thank you

Emily:

Transfer the 401K to a rollover IRA and forget about cashing out the 401K. The taxes and penalties are so bad that you could pay 40% annual interest on the credit card and STILL come out ahead over doing the cash-in of the 401K.

Okay, Thank you for answering, but I was also wondering about how much would I get out of it if I did cash it out. Any help would be appreciated. Thank You

To adequately answer the question, I would need to know how much your annual income was (from all soucres, not just your salary).

Here is some more information
Current Balance: $6,446.17
Vested Balance: $5,981.79
Personal Rate of Return*: -10.26%
Pre-Tax Contribution Rate 10.00%


And my income was: $19,422.63

Assuming you get the current balance, the 10% Early Withdrawal Penalty will be $645.

That penalty CANNOT be mitigated, which means that if deductions and exemptions completely offset the rest of the taxes, you will STILL pay $645.

Your actual tax on the $6,446 will be $968, so your total tax for the withdrawal is $1,613.

This does NOT include STATE income taxes on the early withdrawal.