It's not right, but is it ok?
November 28, 2012 6:55 AM Subscribe
Are we in one of the rare situations where cashing out a 401K makes sense?
posted by anonymous to Work & Money (10 answers total) 3 users marked this as a favorite
My husband is on long-term disability. A few years back, when he was able to work, he ended up with a 401K plan that now has $1900 in it. He had forgotten about it, but the company, now under a different name (I think the original company was sold or went under) has tracked him down to find out what he would like done with the money.
We could really use it to pay some of his doctor bills, and a little bit of research seems to indicate that because he's disabled, the tax penalties might not be as bad as they would be otherwise. Are we missing anything? It's not exactly a life-changing amount of money, but paying off some patient doctors or making a big payment to a credit card would really feel great. If we rolled it over into whatever financial instrument you're supposed to use for this situation - a CD, a Roth IRA, what have you (I'd probably ask Fidelity or my bank that question) he would be in no position to further add to the sum of money to keep the investment growing.
I don't know if it's pertinent, but I make about 30K a year and we file our taxes as married filling jointly. I have a 403B account that I contribute to via my work.