Foy Toy

as long as you are still employed, you cannot access your 401k. at full retirement age (in the plan document) or ending of your employment, you can access the funds, usually to rollover to a self directed IRA. some 401k plans allow loans but there are very strict repayment requirements . an IRA is a different story. yes, you can cash in before age 59 and 1/2, subject to income tax and penalty. borrowing from financial institutions and paying current borrowing interest rates is ALWAYS cheaper than cashing in IRA.
foytoy
Ed Foy, CPA
fond du lac,wi

JABCAT

That’s not true. There are several circumstances where one can access your 401k while still employed. A hardship withdrawal for one also exempts the employee from the 10% early withdrawal penalty tax.

hawkgfr

What he said, including loans from it up to 50%....and you pay interest to yourself... Good thing you are allowed to spend money how you want if you earned it...

sanman55

Maybe he is dying and only has a year or so to live- and does not want to leave it to his kids----could be

johnodrake

I am retired USN. I also had another 20 year career in IT and built an IRA there.

johnodrake

Not all funds are down. I have one IRA that is up 15.5% YTD (mostly defense stocks)

dohabandit

Allow me to further enlighten you folks, have you heard of the "RULE OF 55"?
It's an amazing IRS rule for 401ks, but unfortunately I am a couple years away so I can't drain my money out before the house of cards collapses. Just digits in the ethereal wind, floating away...

Rule of 55 lets you access all of your 401k money, PENALTY FREE, so long as you are 55 years of age and leave your job (fired or quit).
So basically, if you were turning 55 this tax year you could go take a dump on your bosses desk and then start cashing out your 401k penalty free!
Bet you didn't know that, looking forward to all the stories of desk dumps.

Dave O

True. I retired at 57 and had access to my 401k penalty free had I wanted to draw from it.

johnodrake

Since some people equate 401(k) with IRAs it is worthwhile to know that the rule of 55 only applies to employer sponsored 401(k) and does not apply to an IRA.

roadking40

One thing you can't buy in life is time... enjoy the ride with the toys you want, there's no re-do's....

crazycargirl

Sadly, I just had a friend pass away in his sleep at age 51. No known health concerns but it was heart related. What a complete shock to everyone especially his wife and kids. He just got his C8 last year and he was was excited about it. Life is short and can change in an instant. Enjoy today because tomorrow is never promised.

Tally Ho

I have lived my life on the premise that I don't tell you how to spend your money, don't tell me how I should spend mine. It's worked out well so far.

dohabandit

I'll keep my 401k separate from my IRA/SEP then, so at least in a couple years I can still preserve half of my desk dumpage opportunities.

JayhawkCPA

Exactly, i told my dad, "i hope your last check bounces".

Luke-44

51. Wow what a tragic story and very relatable given the angle of him having been a fairly new C8 owner. 51 and unexpected in his sleep, just sounds so unfair. As car girl says tomorrow is promised to no one. Life is about balance, enjoy the present, plan for the future. Everyone has to make the calculation for themselves and their own situation.

This thread has turned out to be a good discussion, presenting the pros and cons of tapping ones 401, a logical consideration of a possible C8 funding source depending on your individual situation. I think in summary, no right or wrong answer, just the consequences of the action (or no action) and impact on your life/happiness to think about.

Krusty84

I don't tell people how to spend their money but sometimes I do let them know how stupid they are for spending it.

Foy Toy

a corvette would hardly be a hardship withdrawal.

AZ99FRC

For those annoyed at the frequently occurring "how to finance your C8" threads, consider the threads may be so popular because they give many forum members an excuse to brag about how much money and/or assets they have socked away. While considered slightly vulgar in days gone by, bragging about your own vast wealth is apparently the new thing. I've never seen so many dick measurers in one place in all my life!

Red08

You asked an honest question, so heres my honest reply...Are you kidding? Cash out a 401K for a car? Borrow the money if you feel you HAVE to have a C8. Remember, a borrower is a slave to the lender.

Bird67

And it's shocking, SHOCKING, that one would find such an intense concentration of dick-measurers on a sports car forum!!



Personally I don't read these threads much, at this stage in my life it's too late too correct all the dumb financial decisions I've made over the years.**

**Oh, and I financed 75% of my car at 2.13%. Swing that!!!