[judydahlonega]

I want to take my money out of my 401k to pay off credit card debt and reinvest the remainder of the money for future needs I am 68 yrs old. Will I have to pay federal and state taxes to do this

[ebaines]

1. Money you pull out to use, for example to pay off your credit card debt, is taxed as ordinary income. So yes, you'll pay federal income tax on the amount you take out, and also state/local income tax (depending on where you live). The administrator will withhold 20% of your withdrawal for federal income tax purposes.

2. Money that you roll over to an IRA continues tax-deferred, so no taxes due now (assuming that you complete the roll over within 60 days). It's best to have your IRA custodian do this for you as a direct rollover, as it is simpler for you and avoids problems of 20% witholding. If you thinking about investing in a non tax-deferred account, like a regular stock or mutual fund investment, then you will pay taxes on the wihdrawal. Obviosuly if your plans are to keep this money invested it would be best to either leave it where ot is in your old 401(k) or move it to a rollover IRA

[Fr_Chuck]

Yes, the money ( except for Roth investments) had the money put in tax free, Taxes was not paid on the money invested. So now when you withdraw the money taxes will be paid unless the money is re-invested in another plan