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The Water Cooler
General Discussion
Thoughts on 'the market' and retirement fund, election, etc.?
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<blockquote data-quote="SoonerP226" data-source="post: 3401370" data-attributes="member: 26737"><p>I haven't looked all that hard at the CARES act, but from what I read on my retirement fund's site, my understanding is that they're basically only waiving the 10% early withdrawal penalty--they're still going to tag you for your full income tax rate, even if they're allowing you to spread it over a few years. If this were a regular investment where they were just going to hit you with capital gains, it would be a good idea to cash out and clear debts, but even without the 10% penalty, you're looking at paying Uncle Sugar upwards of 35% for this--and it'll likely push you into a higher tax bracket, to boot.</p><p></p><p>Look at it this way: if you cash it out to pay off your mortgage, you are, in effect, "borrowing" at 35% to pay off a debt with an interest rate that's what, 4%? And that's not counting the loss of the gains over the long haul that the money would've made if you left it in your retirement account.</p></blockquote><p></p>
[QUOTE="SoonerP226, post: 3401370, member: 26737"] I haven't looked all that hard at the CARES act, but from what I read on my retirement fund's site, my understanding is that they're basically only waiving the 10% early withdrawal penalty--they're still going to tag you for your full income tax rate, even if they're allowing you to spread it over a few years. If this were a regular investment where they were just going to hit you with capital gains, it would be a good idea to cash out and clear debts, but even without the 10% penalty, you're looking at paying Uncle Sugar upwards of 35% for this--and it'll likely push you into a higher tax bracket, to boot. Look at it this way: if you cash it out to pay off your mortgage, you are, in effect, "borrowing" at 35% to pay off a debt with an interest rate that's what, 4%? And that's not counting the loss of the gains over the long haul that the money would've made if you left it in your retirement account. [/QUOTE]
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Thoughts on 'the market' and retirement fund, election, etc.?
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