New job, rollover vs cashing out?

[bigfug]

First, my new job is with the city, IT Support Specialist assigned to DPS/Radio Shop on 15th, so, any of you PD or city guys that stop in, say hi.

Second, trying to decide what to do with my 401k since City has something entirely different than a 401k. I am 30 years old, and hope to stay with the city through the 25 years to reach retirement, unless something spectacular comes up, as this is a good job/benefits etc. I currently have 14442.41 in my 401k, with an outstanding loan balance of 3822.88. There will be at least two more contributions and payments to the 401k and loan before seperation. The loan will be paid out of the remainder, so I will have to pay taxes on that. So, I can take that remainder, put new carpet in the house, replace my Iphone that was stolen today, buy a wilson combat (850 for a border patrol, quad rail, side saddle, case, NIB!), new carpet in the house, and pay off a few bills, which ultimately will reduce my monthly expenditures by over 200 a month. Or I can roll it over into a Roth or something. I even thought there was an account I could roll it into that after a certain period, like 3 years or something, I could take it out without penalty etc, am I wrong on that?

ETA: I should also mention that my wife works and contributes to her 401k as well.

 

[bashed1]

You're aware that if you cash out your 401(K) as opposed to rolling it over into a like investment you'll pay the Feds a 10% penalty of what you cash out, and the entire amount will be considered taxable income in the year you cash it out? I'm not aware of any instrument you could invest it in that would allow you to withdraw it in 3 years penalty-free, either; but I'm not a professional tax consultant - I suggest you visit with one before making a final decision.

 

[carleb]

Resist the urge to cash it out. Saving a little chunk of money when you're young generally beats trying to save a lot when you're old. After taxes and penalty, that dab of cash won't go as far as you think it will. Pay for carpet, Iphone, etc. some other way.

 

[DanB]

I don't have a crystal ball but you might. 14k in a 401K rolled into a Roth IRA will be much much more in 30 years. That and you don't know if you will be downsized in a budget crisis next year.

You won't know where your 14k went after the Fed and State take care of it. Roll it over and contribute $50 a month if you want. Don't make a stupid decision now. Keep your retirement account seperate. Continue to build it up. Who knows when you retire you might have just enough in the IRA to fund a business venture you started working on 5 years from now.

Your money, your decision. Just don't ignore sound advice.

 

[crg1372]

Its not even debatable. Roll it over and don't get penalized. Sounds like you're wanting to make some impulse buys and its clouding your ability to make proper decisions.

 

[bigfug]

Well, not really impulse buys, been wanting to get the carpet for a while, and trying to get debt free, it would cover the last of it. I know about the penalties and taxes, prob come out to around 8 from the original 14, but, when you think I only put half of that in there, it basically works out to the same as if I hadnt put it in the 401k. I guess I'll talk to a financial advisor and find out more about what the city offers.

 

[Lurkerinthewoods]

After taxes and penalty you will likely see around 5 or 6 grand. I guess that's better than nothing once the dollar collapses. I would buy the gun, pay a few bills and grab some 90% silver. JMO

 

[carleb]

Someday you'll be embarrassed you have even asked this question. Roll that $$ over and forget you even have it.

 

[n423]

As stated above, rollover, don't pay a penalty.

 

[Perplexed]

The answers to this question definitely separate the optimists from the pessimists