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Mid Michigan | I did exactly like what you are thinking about doing three years ago. It was kind of a balzy move according to everybody I talked to but I did it anyway. 40 acres with a house came up for sale attached to some land I already had so I did it. I was able to act much quicker than anybody else because I literally had the cash to pay for the place. I had to make a few arrangements and phone calls but it went pretty smooth and I got it done. I was looking it as a way to diversify myself too and farmland is something you can use and somewhat enjoy and be invested in. I started looking at that 401 K as a disqusting pipe dream that I might not ever get to use anyway and there was the possiblilty of the markets taking a dump and me losing most of what I cashed out anyway and ending up with nothing. I watched it dive in 2006 and it recovered and I dumped it in 2010. I had three seperate 401 K plans at the time so I only cashed out one of them. Whatever you cash out it will be taxed and if you're not 59 1/2 they will take another 10% for a penalty. You will have to add the amount you cash out to your gross income for the year and whatever tax bracket you fall in you will have to pay the IRS that much. I was lucky because half of my money was put in the 401 K in an after tax fund that we had for many years. It was basically a form of a Roth IRA that we had before they even came out. My tax guy was kind of impressed because he said not many people have those plans like I did. Everybody will tell you not to do it because you will lose half your money. My opinon was WHO CARES! You will always be taxed on anything you withdraw from there anyway and this way you wont have to pay some bank big interest for a loan so who really wins? Surely not the bank! Who's to say tax rates wont be 40-50% when you cash that thing in anyway? I've watched a lot of 40-50 year old guys die this year and I'm not waiting till I'm older to do anything anymore. Do what you want, It's your money and screw the naysayers. The ones that want you to keep it in there are usually the ones that run a business managing 401 K's. I can tell you that it didn't even phase me a bit to do it. Go for it. | |
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Another 401k question--to buy land or not??
