In response to:

Dave Says Don't be Dumb

BillCofIN Wrote: Nov 28, 2012 1:23 AM
None.

Dear Dave,

Is it a good idea for a married couple in their early thirties, who have a lot of student loan debt, to cash out one of their 401(k)s to pay it off?

Marcy

Dear Marcy,

No way! You never cash out a 401(k) or IRA to pay off debt, unless it’s to avoid a foreclosure or bankruptcy. Let’s say you take $50,000 out of your 401(k). Do you know what happens next? They’re going to charge you a 10 percent penalty, plus your tax rate. If you make $75,000 a year, that puts you in a 25 percent...