Split distribution from 401 k

[Lulu08]

Despite tax hit, Any success stories with split distributions from 401 k after leaving a company-will need to pay off 50k in renovation debt

[compassion101]

Not sure what you mean by success stories. You are gonna have to take the tax hit. Are the renovations something that could go on a 2nd mortgage instead? That would be a much better alternatrive

[thom02099]

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@Lulu08 wrote:
Despite tax hit, Any success stories with split distributions from 401 k after leaving a company-will need to pay off 50k in renovation debt

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There are too many variables to really answer your question.  Things such as what you have available in your 401(k), your age, what your plan will and will not allow upon termination of employment (some have restrictions).  In addition to the tax hit there could also be early withdrawal penalties depending on your age and how much income you've already made this calendar year (can move you into a different tax bracket).  More information would be useful.

[Lulu08]

I really want to only have 1st mortgage, and be rid of all other debt--focus on paying down mortgage in maximum of 10 years. Will probably use future pension eventually of approx 1500/mo to pay down mortgage.
Age 49, 300 k 401k,will get another job and save thru that 401 k plus open roth

[Lulu08]

I'm just curious if anyone has had to do a split distribution based on unforseen circumstances and was able to regroup continue saving and made up perhaps thru a combination of investing and saving recoup some of what was lost..

My other condideration is to utilize 72t and take substantially equal withdrawals to avoid 10%~~~pay down renovation debt----but i would still have debt for a while ---

[compassion101]

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@Lulu08 wrote:
I really want to only have 1st mortgage, and be rid of all other debt--focus on paying down mortgage in maximum of 10 years. Will probably use future pension eventually of approx 1500/mo to pay down mortgage.
Age 49, 300 k 401k,will get another job and save thru that 401 k plus open roth

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Sounds like you will lose a ton of money doing this. Please reconsider.

Person A has 200k invested and owes 100k on his mortgage. Person B has 75k and no debt. Sounds like you prefer to be person B cause you'll sleep better. If so, then okay. Just make sure you understand that person A is wealthier