Hi everyone. I am currently planning on leaving my job. I have a 401k with the employer from whom I will be leaving. I wanted to figure out the best way to move the money. and these are my 3 options.
1. Take disbursement and pay penalty +10% to pay off credit cards. (the 10% penalty is still better than the 21% interest rate on the cards)
2. Take disbursement and pay last of my federal school loans.
3. Roll over into IRA and do nothing except pay hundreds in interest on school loans and credit cards.
Coincidentally my school loans and credit card are both about the same amount as the total 401k. So,here is my question. Is there a way for me to pay my school loans with the 401k without paying the 10% penalty. This would be my preferred option. Is this possible, and how. Do I pay the penalty when I take the distribution and then get a credit back on my tax returns next year? how exactly would it work?
Thanks,
1. Take disbursement and pay penalty +10% to pay off credit cards. (the 10% penalty is still better than the 21% interest rate on the cards)
2. Take disbursement and pay last of my federal school loans.
3. Roll over into IRA and do nothing except pay hundreds in interest on school loans and credit cards.
Coincidentally my school loans and credit card are both about the same amount as the total 401k. So,here is my question. Is there a way for me to pay my school loans with the 401k without paying the 10% penalty. This would be my preferred option. Is this possible, and how. Do I pay the penalty when I take the distribution and then get a credit back on my tax returns next year? how exactly would it work?
Thanks,