Risks, rewards of tapping into your 401k fund early
Worth the penalties?
- Duration 3:26
- Date Apr 1, 2012
Worth the penalties?
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Every Sunday we try to helped out a little bit with your financial plan how many of you have most of your savings wrapped up in a 401K.
-- I Iraq.
It's supposed to be your financial security when you retire.
But what if you need it now maybe you wanna start a small business or pay off a couple of big -- how easy is it to borrow from your 401K and if you do.
How can you avoid some of those penalties.
In today's take charge consumer protection segment we're gonna head right for the fourth richest -- as the former managing director of Morgan Stanley.
In fact folks he ran the company's 401K.
Department if anyone has answers rich does thanks for joining us threats very well again.
You know they say that it's a big mistake to tap into your retirement savings but you know in this economy a lot of people have to you.
Are appropriate -- the government cut your break.
Well if that answer that you could almost take a loan out for any reason you want -- but I would suggest is that a good reason.
I would just take a step back and catch your breath and say if it's for things such as emergencies like a foreclosure for your home or eviction.
-- and goodness funeral expenses I would tell you that's a great reason to go do it.
If you're looking for the weekend in Vegas I would catch your breath.
Yeah or those lottery ticket yeah.
It's still going to remain right -- and let me ask you about.
Had to do it appropriately a -- and how do you rebuild it back up because you watch the lower number and you're gonna wanna.
Get it back in there essentially that's right well we're first of -- it's so easy to get the money -- It's almost like ATM like at this point you can actually take a look at your currents statement account balance that you have.
Look on the bottom you'll see a a website or you'll see a a phone number.
Give them a call or go on the site it'll literally save you I want to take out alone as you click down and go through the web site.
It'll actually allow you typically most plans to model -- see how much money you have you can literally click make a few collects.
And a form is produced it'll tell you the account balance you have available.
You can give that right THR department.
And he issue will sign the form and once the process -- and so it followed the instructions I got that part but how do you avoid some of the fees the taxes what are you going to have to pay in order to bar those fun things to borrow the funds is typically going to be prime or prime plus plus one.
And what happens is the nice thing is through your employer with a processing administration it's actually taken out of the payroll deduction for you.
-- the -- taken out -- you which is wonderful.
Are you paying that interest to yourself yes yes you war so what you -- just understand although it sounds great.
Understand that current new -- new 401K contributions will be suspended.
And if the employer was doing any match you're not gonna be part of that -- that is an excellent point -- you companies still match ours does but it's it's -- that's a big -- would be giving a yes and another big engine give up Jamie understand too is that the dollar that you -- inside of 41 K plan we're not subject to creditors.
Now when you bring those dollars out and -- -- have to file for bankruptcy or anything of that nature you're you're not monies available today that the creditor.
I'm gonna leave -- there -- -- that's enough information for folks to decide if it's the right decision for them.
And they can go to our website for more information to thanks -- so -- little off of my ballot that was really helpful that I'm glad and if you want more information on our take charge consumer protection segment you'll only see them on this program go to foxnews.com.
And click -- America's News HQ page our show page.
Look for a link and there are many many there consumer protection segment for you.
Great advice -- recently thank.