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The Water Cooler
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Tax question
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<blockquote data-quote="tRidiot" data-source="post: 3511047" data-attributes="member: 9374"><p>I remember when looking into pulling money from the 401k when things were bad, yes, you CAN spread those tax payments out. You can ALSO contribute money back INTO the IRA/401k to replace what you took out (not sure if you can do so with a 401k if you have left that company). So let's say for instance you got a new job with HIGHER pay, or you made significant changes in your lifestyle to allow you to replace that entire $68k on top of your ongoing contributions, you can reduce or eliminate the tax on that early withdrawal by replacing it over the same period of time. I THINK.</p><p></p><p>Anyways, something to think about - anything extra you can possibly afford to shovel into your (new) 401k or IRA will offset the taxes on your early withdrawal. Heck, you might be better off taking out a second mortgage to put that money back into your retirement fund - if you can get a 3-5% mortgage, you save the 30% or so in the tax hit, and your money can (potentially) make more than the loan interest per year being back in the market - it's an option, right?</p><p></p><p>Bottom line - talk to a pro.</p></blockquote><p></p>
[QUOTE="tRidiot, post: 3511047, member: 9374"] I remember when looking into pulling money from the 401k when things were bad, yes, you CAN spread those tax payments out. You can ALSO contribute money back INTO the IRA/401k to replace what you took out (not sure if you can do so with a 401k if you have left that company). So let's say for instance you got a new job with HIGHER pay, or you made significant changes in your lifestyle to allow you to replace that entire $68k on top of your ongoing contributions, you can reduce or eliminate the tax on that early withdrawal by replacing it over the same period of time. I THINK. Anyways, something to think about - anything extra you can possibly afford to shovel into your (new) 401k or IRA will offset the taxes on your early withdrawal. Heck, you might be better off taking out a second mortgage to put that money back into your retirement fund - if you can get a 3-5% mortgage, you save the 30% or so in the tax hit, and your money can (potentially) make more than the loan interest per year being back in the market - it's an option, right? Bottom line - talk to a pro. [/QUOTE]
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