Should I cash out my 401(K)?

Are you looking to cash out money from your 401(K)?

In these uncertain times, the focus is on these two things:

  1. Cash Flow

  2. Sources of Cash Flow

 

The Cares Act aka the stimulus bill includes great incentives for business owners, who need access to cash. These includes:

A. Penalty-Free Distributions under the Corona Relief Distribution for up to $100,000

B. Income Tax Spread over 3 years

C. 401(K) Loans for up to 100% of your account balance or $100,000 Max

D. 401(K) Loans Repayment is suspended for 1 year

 

Before cashing out your 401(K), here are a few things to consider:

  1. Consider your tax rate – Will you have a lower tax rate in 2020?

  2. Will there be more losses – What you can think about here is, if your plan will continue to have more losses due to the market losses.

  3. Future taxes – these plans become taxable when the money is taken out during retirement. You can consider other options such as a Roth Conversion.

  4. Use of Funds –The use of the fund is important because this will help you to see how you can use this money to make more money.

 

Is this the right decision for you? What other cash flow incentive can you take advantage of this year?

For more information on how to go about this option, schedule a FREE CONSULTATION HERE!