401K & credit card debt
We currently have appx $65K in credit card debt. We have appx $1.26M in our 401K plans ( combined) should I be looking to wiithdraw money to pay off the credit card debt
Terry Says
That depends on your age — and other financial circumstances. If you’re under age 59-1/2 there’s a 10% penalty, in addition to ordinary income taxes on the withdrawal.
Do you intend to EACH withdraw cash from your retirement plan? Does each of your plans allow a “loan” — which must be repaid if you leave employment — but could give you a chance to replace the money without penalty or taxes.
I agree it doesn’t make sense to pay 20+% interest on credit card debt. But if you do pay it down, I hope you will put the cards away and learn your lesson!
