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Posted by / 01-Nov-2017 17:43

Liquidating rollover 401 k

If you never invested another dime into your nest egg and just let it compound for another 20 years, you would be sitting on

If you never invested another dime into your nest egg and just let it compound for another 20 years, you would be sitting on $1.06 million.But, what would happen if you had taken just one $20,000 early withdrawal from your Roth IRA after that first 20 years?An early withdrawal can help you escape from having to borrow the money needed for these items.Borrowing from a financial institution can subject you to high interest rates.

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If you never invested another dime into your nest egg and just let it compound for another 20 years, you would be sitting on $1.06 million.

But, what would happen if you had taken just one $20,000 early withdrawal from your Roth IRA after that first 20 years?

An early withdrawal can help you escape from having to borrow the money needed for these items.

Borrowing from a financial institution can subject you to high interest rates.

The reason: You have already paid taxes on the money you deposited.

Roth IRAs take after-tax contributions (you didn’t get a tax deduction on the money).

.06 million.But, what would happen if you had taken just one ,000 early withdrawal from your Roth IRA after that first 20 years?An early withdrawal can help you escape from having to borrow the money needed for these items.Borrowing from a financial institution can subject you to high interest rates.

So if you had ,000 in contributions and took out ,000, you would owe on the ,000, not the whole amount.You can escape both the tax and the penalty if the account is at least five years old 59½ or meet a few other specifications (being disabled is one).The beauty of a Roth IRA and other retirement accounts is the power of compounding interest.You won’t have a choice: the administrator will deduct it automatically from your check.And if you thought paying 10% on a mere withdrawal hurt, imagine the crack it’ll make in your entire nest egg. Because your 401(k) was funded with pre-income tax dollars, you’ll get hit with a tax bill in the year you take possession of those funds.

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A Roth IRA offers investors a unique tool for accessing money in a pinch.

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