I would not take a withdrawl on a 401K to pay off credit card debt. The savings on the credit card debt would be more than offset by the tax ramifications. Since you are not at leat 59 1/2 the withdrawl would be considered a premature distribution. The premature distribtion would be hit with a 20% penalty from the IRS which is deducted before you receive the check this does not factor in the tax ramifications from state in which you live. The whole 5900 is treated as ordinary income which is fully taxable at years end. If only as a last resort if your plan allows you to get a loan / borrow from 401K you might consider that. You can borrow the money at the interest is set by the plan. Since you are re-paying yourself with interest is not deductible. Here is the catch. If you leave the company you must pay the balance in full or run into the problems described above. In a nutshell it is not worth it.
FICO Scores XPN v8 802 V2 831 (SDFCU) TUC 803 v8 EFX 807 (10/2023)
Discover 09/90 19,000, JCPenney 10/2008 4,700 US Bank Cash 12,000 Citibank Custom Cash 5/2015 11,100 State Dept. FCU 15,000 06/2023 , 02/2024 Redstone FCU Signature VISA 10,000 Banking: Ally Bank Credit Unions: Lafayette FCU Fortera FCU State Department FCU Pelican CU
Pelican State CU Redstone FCU
