I am in need of financial advice. I will be 59 1/2 next August, I have a full time job and a par time job. I have 401K in both jobs . I have 135 K in my full time job and i contribute 10% of my pay, about 600 every two weeks. I have 115K in my part time job and I contribute 3% of my pay, about 50 dollars every two weeks. My youngest son will be attending college on August and I will need about 1500 a month. Here is what I was planning to do:
1. Roll over the 115 K from my part time job into my full time job 401K and decrease my contributions to 3%, which will give me around 1000 K.
2. Take a 25 K distribution from my 115 K and pay off one of my vehicles . Wait for January and do the same thing and pay off my second vehicle. This way, I will have around 1200 a month.
I will appreciate your advice.
Mon Jul 06, 2015 9:28 am
oldguy Senior Member
Cash: $ 715.40
Joined: 21 May 2006
I wouldn't prepay the vehicle loans, car loans are pretty cheap these days, the money is probably earning more right where it is.
As for rolling the 401k's - I doubt that the company rules will let you do that, most Plans require that you quit/retire to take the money. Besides, the tax penalty would be horrendous - according to your numbers, you earn about $200,000/yr - the tax bill on a $25,000 distribution would be about $10,000, Fed & AZ. Leaving you with only $15,000 of your $25,000. It would be better to wait until retirement, when your income/tax rate is low, before you take distributions.
IMO, it's better to leave your retirement accounts alone - and borrow for your son's college - that will be way cheaper than taking a $10,000 hit to get $15,000 cash. Alternately, with your high income - can you cash flow the college costs?
Thank you for your reply. Yes, I think I can pay cash for my son's education, I id that with my two older ones. However, this would be kind of tight. I checked and my part time employer allows roll overs after 59 1/2. Thus, is it better to roll over and decrease my contributions to my full time 401K to 3%, instead of taking money out.
Mon Jul 06, 2015 3:40 pm
Cash: $ 380.25
Joined: 09 Feb 2009
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Fri Jul 10, 2015 2:50 pm
sunjava New Member
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