Pros and cons of liquidating 401k
While being mortgage-free is an enviable position to be in, having a shortage of retirement savings is a decidedly unenviable position in which to find yourself.
Gary Foreman is a former financial planner who currently edits The Dollar Stretcher website and newsletters.
But before making the decision, consider whether the opportunity cost is worth it.
Tied to your company: If you quit or lose your job, you typically have to repay your 401(k) loan in full soon thereafter, regardless of the original loan terms.
While I don’t adhere to such a hardline view myself, one thing is certain…
Unless a post is clearly marked "Sponsored", however, products mentioned in editorial articles and reviews are based on the author's subjective assessment of their value to readers, not compensation. I have enough in savings to make up the difference. That being said, you can withdraw Roth IRA contributions at any time, without taxes or penalty.
But beware the potential pitfalls: Your plan may allow you to withdrawal from your retirement savings for a first-time home purchase or an emergency (such as medical or funeral expenses).
Withdrawals have stricter rules and bigger consequences.
Your 401(k) is a retirement account, and it serves you best in that capacity.
But you can save a lot in interest by using a 401(k) loan to pay off credit card debt, Harvard Business School professor and behavioral economist John Beshears says.