Roll it over to an IRA

The penalties will make the entire deal not worth the little benefit you will gain from it.
In response to Cassie (I think) Mark only recommends cashing out the 401K in the case of foreclosure. And then only if you are 100% committed to staying out of debt forever.

Mark has always recommended to roll it over

because with penalties and taxes, he says it is the equivalent to borrowing money at 30 or 40% to pay down debt. If he has ever recommended cashing it in, I have never heard it or for what reason.

When I left my last job, I was fully vested and rolled over about $22K

At my previous employer

I had a 401K plan which they contributed to. Since I was there over 5 years, I was fully vested. I have the option to either roll it over into an IRA or cash out. If I cash out, 20% will be deducted for federal tax and 5% for state tax, plus I’ll have to pay a 10% penalty when tax time comes. So I am trying to decide what to do. We could use the cash right now to finish up some projects or put towards debt, but I am not sure if it’s worth it. The amount of the plan was not a huge amount, but still significant – about $1700.
Any thoughts on what Dave would recommend or what you all would do?


I bought some supplies to extend an existing circuit in my basement, and run a totally new one. I also made a full map of what circuits on my breaker box route to which lights and outlets. So know I know which circuits are barely used and can be added to…