hope you can understand this

iVillage Member
Registered: 12-31-2005
hope you can understand this
4
Sat, 03-04-2006 - 6:11pm
my DH has 3 retirement accounts. One is from a job he was at back in 85 to 93. He has another one from a job after that that he was at for 5 years and the job he is at now has been there 31/2 years is really good reterement they macth what is taken out every payday.
Here is the thing I was wondering if it was possible to take the money out of the first one and use it to pay off a 5,000 credit card balance. Would be great to get rid of this or should I pay off cc with 1,717 balance and close out this card (Discover) and then put the balance on the other card. This is something that came to me in the middle of the night. Perimenapause thing so I don't sleep well. What do you think or can it even be done. Also the job that he is at now he is planning to stay at till he does ret. in 17 years he will be able to or can stay longer. Thanks

over 40 and tired

iVillage Member
Registered: 05-09-2005
Sat, 03-04-2006 - 8:24pm
It is generally NOT A GOOD IDEA to take $$$ out of a retirement account since they are usually tax deferred and you would have to a) pay income tax on the $$ you take out and b) probably have to pay an additional 10% penalty if you take the $$ out before your husband is 59 and 1/2. It would be equivalent to paying the credit cards off at a 40% interest rate.
He could see about rolling the 2 old accounts into an IRA and separating them from the old employers. But to answer your original question -- paying off credit cards with money that was tax deferred in the first place and would now cost you a lot in taxes and penalties is a really bad idea.
Megan
iVillage Member
Registered: 12-12-2004
Sat, 03-04-2006 - 8:47pm
Hi, I agree with Megan. DONT do it. Why? Well, back when I had major surgery (which was not covered--long story), I decided to go to the Morgan Stanley/Dean Whitter thing and just liquidate it to cover basic expenses (I wasnt working at the time--off 3 months, etc.). Bad move. In addition to now not having some retirement or savings, I ended up paying whopping 10% penalties and interest. YOu're better off rolling over everything into a ROth IRA or current company plan. Your DH is lucky to have a generous retirement package. No matter how financially challenged, or tempted I am to pay something off, buy something, I will never again (and havent since) liquidate any type of retirement or savings plan for retirement. It is too hard to play catch-up later. JMO. Whiz.
iVillage Member
Registered: 03-16-1999
Sun, 03-05-2006 - 4:15am
I usually lurk but since I've had to make a similar decision recently I thought I would add my two cents. I agree with all others in their advice to leave retirement accounts alone. You did not say what interest rates your cards have but... Although the days of 0% interest on transfers for the life of the loan are about over (interest rates have gone up), there are still some 2.9% for the life offers out there. We rolled some stuff into a 0% account a while ago and recently rolled the rest into a 2.9% for life account. The trick is that you cannot charge an additional dime on those accounts or you get the system doesn't work. We locked up the cards. We found that the companies also wanted to send us an additional $7,000 just for being such nice people. We of course refused. We have moved most of our stuff into one of those accounts and are just paying them off as fast as possible. It is so much fun watching how fast the balances come down! It adds a whole new twist to snowflaking!
iVillage Member
Registered: 12-31-2005
Sun, 03-05-2006 - 9:17am
The card that I wanted to pay off has a balance of 1,717.00 on it with a 18.24 interest rate. I had to laugh when i got bill yesterday 35.00 min and the interest was 27.00. I am making a payment today then maybe I should see about transferring the balance I know I have 74.oo waiting to be billed to this card. I did get offer in mail to yesterday for another visa. Maybe I should look at it. Thanks for the info.

over 40 and tired