Use 401k to pay for school?

iminhell1 · 01-09-2020, 05:44 PM

Never did look into fees of pulling 401k, but I do have to go talk with them being I left the company. Roll over to IRA I guess is the option now. I did find some 'hardship' option. Need to find out more about what that is.

But I took out loan to pay for school, which starts Monday (01/13/2020).

IllSic_Design · 01-09-2020, 06:03 PM

Well if you are no longer with the company you either have to cash it out or roll it over to an IRA. I would def rollover to an IRA.

chassis · 01-09-2020, 08:48 PM

Not necessarily. Some plans allow the account to remain open indefinitely. I have accounts that were opened 30 years ago, almost a dozen employers ago.

gatorfast · 01-10-2020, 12:39 PM

Quote:

Originally Posted by chassis

Not necessarily. Some plans allow the account to remain open indefinitely. I have accounts that were opened 30 years ago, almost a dozen employers ago.

Wow then you likely missed out on some serious additional growth in a lower cost IRA vs 401k. Generally 401k funds have much higher expense ratios then funds/ETFs you can get in an IRA.

Run Silent · 01-10-2020, 02:56 PM

My ultimate answer is to cashflow school and pay as you go. It's easier than many people think.

That being said - if that isn't an option for you then do not use the 401(k) and here is why:

1) Aside from the taxes, you will pay a 10% penalty and lose the interest gained if it was still there.
2) Overall, that nets to an interest rate likely to be somewhere around 30%.

Would you borrow money at 30% interest to go to school? I think we all know the answer to that question.

With respect to your comments about no growth - something is wrong. The market has nearly doubled in the last year. Just having it in standard index funds would have netted you a gain of double what you had last year.

You need to make some adjustments in there right away.

gatorfast · 01-10-2020, 09:21 PM

Quote:

Originally Posted by Run Silent

My ultimate answer is to cashflow school and pay as you go. It's easier than many people think.

That being said - if that isn't an option for you then do not use the 401(k) and here is why:

1) Aside from the taxes, you will pay a 10% penalty and lose the interest gained if it was still there.
2) Overall, that nets to an interest rate likely to be somewhere around 30%.

Would you borrow money at 30% interest to go to school? I think we all know the answer to that question.

With respect to your comments about no growth - something is wrong. The market has nearly doubled in the last year. Just having it in standard index funds would have netted you a gain of double what you had last year.

You need to make some adjustments in there right away.

Uhh the market has done well over the last year but it most certainly has not doubled...

Run Silent · 01-10-2020, 10:55 PM

Quote:

Originally Posted by gatorfast

Quote:

Originally Posted by Run Silent

My ultimate answer is to cashflow school and pay as you go. It's easier than many people think.

That being said - if that isn't an option for you then do not use the 401(k) and here is why:

1) Aside from the taxes, you will pay a 10% penalty and lose the interest gained if it was still there.
2) Overall, that nets to an interest rate likely to be somewhere around 30%.

Would you borrow money at 30% interest to go to school? I think we all know the answer to that question.

With respect to your comments about no growth - something is wrong. The market has nearly doubled in the last year. Just having it in standard index funds would have netted you a gain of double what you had last year.

You need to make some adjustments in there right away.

Uhh the market has done well over the last year but it most certainly has not doubled...

Fair. It's doubled in the last 4 years. Point still stands.

BayMoWe335 · 01-11-2020, 12:07 AM

Terrible idea.

c1pher · 01-11-2020, 07:27 AM

Quote:

Originally Posted by chassis

Not necessarily. Some plans allow the account to remain open indefinitely. I have accounts that were opened 30 years ago, almost a dozen employers ago.

Yes, I held mine for over six years with a company’s 401k (or 409k in Pres. Trump’s world hehe) I was no longer employed at. I wasn’t allowed to add more funds but I could keep what I had in there.

c1pher · 01-11-2020, 07:31 AM

Quote:

Originally Posted by Run Silent

Fair. It's doubled in the last 4 years. Point still stands.

I was going to say, I need you as my advisor.

gatorfast · 01-11-2020, 08:13 AM

Quote:

Originally Posted by Run Silent

Quote:

Originally Posted by gatorfast

Quote:

Originally Posted by Run Silent

My ultimate answer is to cashflow school and pay as you go. It's easier than many people think.

That being said - if that isn't an option for you then do not use the 401(k) and here is why:

1) Aside from the taxes, you will pay a 10% penalty and lose the interest gained if it was still there.
2) Overall, that nets to an interest rate likely to be somewhere around 30%.

Would you borrow money at 30% interest to go to school? I think we all know the answer to that question.

With respect to your comments about no growth - something is wrong. The market has nearly doubled in the last year. Just having it in standard index funds would have netted you a gain of double what you had last year.

You need to make some adjustments in there right away.

Uhh the market has done well over the last year but it most certainly has not doubled...

Fair. It's doubled in the last 4 years. Point still stands.

No it hasn't...

Where are you seeing this? Using the S&P 500 as a benchmark it was ~2,000 in 2016 and is a little over 3,000 today. A roughly 50% increase which is great but far short of a double.

sixburgh · 01-11-2020, 08:27 AM

To answer the post question. NO !

Run Silent · 01-11-2020, 04:29 PM

Quote:

Originally Posted by gatorfast

Quote:

Originally Posted by Run Silent

Quote:

Originally Posted by gatorfast

Quote:

Originally Posted by Run Silent

My ultimate answer is to cashflow school and pay as you go. It's easier than many people think.

That being said - if that isn't an option for you then do not use the 401(k) and here is why:

1) Aside from the taxes, you will pay a 10% penalty and lose the interest gained if it was still there.
2) Overall, that nets to an interest rate likely to be somewhere around 30%.

Would you borrow money at 30% interest to go to school? I think we all know the answer to that question.

With respect to your comments about no growth - something is wrong. The market has nearly doubled in the last year. Just having it in standard index funds would have netted you a gain of double what you had last year.

You need to make some adjustments in there right away.

Uhh the market has done well over the last year but it most certainly has not doubled...

Fair. It's doubled in the last 4 years. Point still stands.

No it hasn't...

Where are you seeing this? Using the S&P 500 as a benchmark it was ~2,000 in 2016 and is a little over 3,000 today. A roughly 50% increase which is great but far short of a double.

Why are you arguing with me on this? You're the guy where someone asks if the sun rises in the east and I say yes, in the east at 710am. And then you whine that it's actually 714am. Point still stands.

I used the DJIA.

16,300 in Jan 2016. Almost 30,000 today. Close as makes no difference, it doubled.

Stop being an internet pedantic.

NemesisX · 01-11-2020, 06:03 PM

I'm gonna step in and agree with Run Silent. Gatorfast's obsession over whether or not the market has exactly doubled over the last 4 years is not helpful and misses the point and spirit of Run Silent's post.

The point is that the original poster:

(1) is grossly underfunding his retirement accounts
(2) is misinformed to even consider taking money out of his 401k before retirement age given the serious tax penalties
(3) has missed out on tremendous market returns over the past 5 years

gatorfast · 01-11-2020, 08:45 PM

Sheesh tough crowd. I simply pointed out that it hadn't doubled in the last year which was the original comment. Then I looked at the S&P over 4 years as suggested and saw it wasn't close to doubling either. Wasn't trying to pick a fight, just have a discussion and correct some initial misinformation. Y'all need to lighten up.

roastbeef · 01-11-2020, 08:52 PM

Quote:

Originally Posted by Run Silent

Would you borrow money at 30% interest to go to school? I think we all know the answer to that question.

i love balance sheet analysis. makes decisions easy and unemotional.

01-09-2020, 05:44 PM	#23
iminhell1 C2H5OH 4147 Rep 2,150 Posts Drives: 2010 SG 135i auto Join Date: May 2015 Location: Darwin, MN iTrader: (1)	Never did look into fees of pulling 401k, but I do have to go talk with them being I left the company. Roll over to IRA I guess is the option now. I did find some 'hardship' option. Need to find out more about what that is. But I took out loan to pay for school, which starts Monday (01/13/2020).
	Appreciate 2 Ickdeep5737.50 c1pher5074.50 Quote

01-09-2020, 06:03 PM	#24
IllSic_Design Colonel 2125 Rep 2,759 Posts Drives: 12 E92 328i Join Date: Jun 2016 Location: Northern California iTrader: (1)	Well if you are no longer with the company you either have to cash it out or roll it over to an IRA. I would def rollover to an IRA.
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01-09-2020, 08:48 PM	#25
chassis Colonel 8356 Rep 2,528 Posts Drives: 9Y0 Cayenne S Join Date: Mar 2019 Location: Einbahnstraße iTrader: (0) Garage List 2020 Porsche Cayenne S [7.69]	Not necessarily. Some plans allow the account to remain open indefinitely. I have accounts that were opened 30 years ago, almost a dozen employers ago.
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01-10-2020, 02:56 PM	#27
Run Silent Run Deep 15088 Rep 4,123 Posts Drives: Back and Forth To Work Join Date: Mar 2017 Location: The Mountains iTrader: (0) Garage List 2018 Alfa Romeo Giu ... [0.00] 2022 Ford Bronco 2d ... [0.00] 2016 Alfa Romeo 4C [8.50] 2019 BMW i8 Roadster [10.00]	My ultimate answer is to cashflow school and pay as you go. It's easier than many people think. That being said - if that isn't an option for you then do not use the 401(k) and here is why: 1) Aside from the taxes, you will pay a 10% penalty and lose the interest gained if it was still there. 2) Overall, that nets to an interest rate likely to be somewhere around 30%. Would you borrow money at 30% interest to go to school? I think we all know the answer to that question. With respect to your comments about no growth - something is wrong. The market has nearly doubled in the last year. Just having it in standard index funds would have netted you a gain of double what you had last year. You need to make some adjustments in there right away. __________________ *Don't sweat petty things....or pet sweaty things.*
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01-11-2020, 12:07 AM	#30
BayMoWe335 Colonel 1226 Rep 2,132 Posts Drives: 2010 E92 335i 6MT Join Date: Aug 2009 Location: US iTrader: (0)	Terrible idea.
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01-11-2020, 08:27 AM	#34
sixburgh Lieutenant 204 Rep 428 Posts Drives: 2010 128i 6 MT BMW PE Join Date: Dec 2010 Location: Atlanta, GA iTrader: (0)	To answer the post question. NO !
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01-11-2020, 06:03 PM	#36
NemesisX Captain 321 Rep 905 Posts Drives: '19 Infiniti Q60S Join Date: Jul 2009 Location: TX iTrader: (0)	I'm gonna step in and agree with Run Silent. Gatorfast's obsession over whether or not the market has exactly doubled over the last 4 years is not helpful and misses the point and spirit of Run Silent's post. The point is that the original poster: (1) is grossly underfunding his retirement accounts (2) is misinformed to even consider taking money out of his 401k before retirement age given the serious tax penalties (3) has missed out on tremendous market returns over the past 5 years
	Appreciate 2 vreihen1621981.50 Run Silent15088.00 Quote

01-11-2020, 08:45 PM	#37
gatorfast Major General 5089 Rep 6,884 Posts Drives: 718 Cayman Join Date: Jan 2008 Location: SoFla iTrader: (4)	Sheesh tough crowd. I simply pointed out that it hadn't doubled in the last year which was the original comment. Then I looked at the S&P over 4 years as suggested and saw it wasn't close to doubling either. Wasn't trying to pick a fight, just have a discussion and correct some initial misinformation. Y'all need to lighten up.
	Appreciate 0 Quote