Should we rollover our 401(k) or pay off our mortgage with the funds?

We have a 401(k) with a company that was bought out. It is worth $186,000. We have other investment accounts that total $250,000. We have a rental house that we owe $150,000 on at 3.65% for 25 more years. Should we withdraw from our 401(k) and cash it out with a 10% penalty to pay off the house, or roll it over?

Debt, 401(k), Real Estate
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March 2017
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I would not recommend withdrawing from your 401(k), even if you were not subject to the 10% penalty. Don't forget, that in addition to the 10% penalty that is incurred if you are under the age of 59-1/2, you will also pay tax on the amount withdrawn. $150,000 in additional income will most likely throw you into one of the highest tax brackets, so you would pay 28-33%, and possibly more, tax on your distribution. When you add the 10% penalty, you would be paying close to 40% in taxes. Another thing I would mention is that you have a 3.65% mortgage rate, which is extremely low historically. If your investments in your 401(k) can average more than 4% over the years, you are way ahead by staying invested.

March 2017
March 2017
March 2017
March 2017