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Thread: Should I rape my own 401K?

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  1. #1

    Should I rape my own 401K?

    As of today, my 401k plan through my employer will allow me to withdraw (not borrow) around 60,000 of my total 401k.

    I will take a bit of a hit on taxes but I really want to get the hell as much as I can out of my company's 401k plan. I would like to maybe use half to do some home improvements (I know this is not an investment) and invest the rest in overseas markets, commodities, etc...

    Thoughts?



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  3. #2
    Quote Originally Posted by Yukon Cornelius View Post
    As of today, my 401k plan through my employer will allow me to withdraw (not borrow) around 60,000 of my total 401k.

    I will take a bit of a hit on taxes but I really want to get the hell as much as I can out of my company's 401k plan. I would like to maybe use half to do some home improvements (I know this is not an investment) and invest the rest in overseas markets, commodities, etc...

    Thoughts?
    Yes do it. And yes a home improvement is an investment, particularly if you are adding in quality work/items/in demand improvements. That and you will likely enjoy the house more if it is something you will use a lot.

    If you are ALLOWED to withdraw YOUR money without much of a penalty, do it. Just do your research and invest it wisely and you'll be ok.
    "Like an army falling, one by one by one" - Linkin Park

  4. #3
    Depends on your age. If you're younger than 40 I wouldn't do it.

  5. #4
    Not knowing your tax bracket , but lets say taxes take 25% ( 15k ) , i think there is a 10% goverment penalty ( 6k ) , or $21,000 total , you net 39k. You lose > 30%.

    You may take 10-15 years to recap the 30% even if you are right in your investments.

    Also you would be losing the return of the $21,000 if you leave it in the 401K.

    Its a tough choice. With home values forcast to drop another 10%. Also if you buy gold/silver , you have to store it somewhere. Starting 2012 all gold sales/buys over $600 must be reported.

    I would buy farm land.

  6. #5
    Quote Originally Posted by brandon View Post
    Depends on your age. If you're younger than 40 I wouldn't do it.
    What was the avergae (approximately) loss of 401k's and retirement savings plan in the USA for 2008? 25-50%?
    "Like an army falling, one by one by one" - Linkin Park

  7. #6
    Quote Originally Posted by Seraphim View Post
    What was the avergae (approximately) loss of 401k's and retirement savings plan in the USA for 2008? 25-50%?
    Something like that. Your point?

  8. #7
    Quote Originally Posted by brandon View Post
    Something like that. Your point?
    My point is this:

    Retirement savings plans are general investments into a market that is inherently rigged against the little guy.

    Typically these retirement plans consist of 10-30% BONDS. People seem to often be closer to the 30% level. The reason why you get a tax break for (labelled as non taxable income) putting money in these accounts is that in doing so you are pruchasing a substantial amount of the Govt's debt. Without your RRSP's and 401K's the Govt's GOES BANKRUPT.

    So for those of you who preach END THE FED (or Central Banking in general). Take your money OUT OF THE 401K's AND RRSP's. By putting your money there you prop up the very system you abhor.
    Last edited by Seraphim; 08-10-2010 at 09:27 AM.
    "Like an army falling, one by one by one" - Linkin Park

  9. #8
    Quote Originally Posted by Seraphim View Post
    My point is this:

    Retirement savings plans are general investments into a market that is inherently rigged against the little guy.

    Typically these retirement plans consist of 10-30% BONDS. People seem to often be closer to the 30% level. The reason why you get a tax break for (labelled as non taxable income) putting money in these accounts is that in doing so you are pruchasing a substantial amount of the Govt's debt. Without your RRSP's and 401K's the Govt's GOES BANKRUPT.

    So for those of you who preach END THE FEB (or Central Banking in general). Take your money OUT OF THE 401K's AND RRSP's. By putting your moeny there you prop up the very system you abhor.
    More ill informed nonsense.

    You can say that short term trading is rigged against the little guy, but buy and hold investment strategies have provided far more winners than losers. Broad market investments perform quite well in both generating an income from dividends and providing capital gains as businesses grow.

    A 401k can be invested in whatever you want. You can have a 100% stock 401k, if you'd like. Oh, and a slight majority of funds offer a trading window which allow you to buy any stock/fund/etf that your heart desires. Leave out the conspiracy theories and you'll find that the taxing system for 401ks is entirely rational. 401ks allow tax free compounding of returns, and give the US government a stake in the performance of the financial markets.

    As long as the average return of a US retirement fund is greater than the cost to borrow through treasuries, it makes sense for the US government to want taxes later, instead of up front.

    How does a 401k support the system that we abhor? I'd love to hear your explanation for that one.



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  11. #9
    Quote Originally Posted by Seraphim View Post
    What was the avergae (approximately) loss of 401k's and retirement savings plan in the USA for 2008? 25-50%?
    What was the average (approximate) loss for silver in the USA for 1980? (Since you appear to recommend silver in every thread you post.) Oh, how about the average (approximate) loss for homes in the USA from 2007-2008?

    Cherry picking one year to define an investment strategy is pathetic. It just goes to show that your input is based more on fear and irrational decision-making than it is facts and evidence.
    Last edited by Jordan; 08-10-2010 at 09:17 AM.

  12. #10
    Quote Originally Posted by Jordan View Post
    What was the average (approximate) loss for silver in the USA for 1980? (Since you appear to recommend silver in every thread you post.) Oh, how about the average (approximate) loss for homes in the USA from 2007-2008?

    Cherry picking one year to define an investment strategy is pathetic. It just goes to show that your input is based more on fear and irrational decision-making than it is facts and evidence.
    No I was making a point. Look at those very same investments now? They are barely back to where they were before. Adjust for inflation: Substantially lower. Gold? and Gold mining stocks? Very quickly recovered and went to nominal all time highs.

    Read my post that I typed out as you posted this one.
    "Like an army falling, one by one by one" - Linkin Park

  13. #11
    Quote Originally Posted by Seraphim View Post
    No I was making a point. Look at those very same investments now? They are barely back to where they were before. Adjust for inflation: Substantially lower. Gold? and Gold mining stocks? Very quickly recovered and went to nominal all time highs.

    Read my post that I typed out as you posted this one.
    Silver is as high as it was in 1980? Gold? When adjusted for inflation, you would've lost over the last thirty years. Nevermind the fact that neither gold nor silver generate an income, so what you see is what you get.

    Gold and silver are driven by fear, so it is only reasonable that they would appreciate in the economic climate we have today. However, how long that fear will persist is anyone's guess.

  14. #12
    Do it in the following way:

    Take the max loan you can take

    Stretch out the term as long as possible (20+ years?) to minimize payments

    When you leave your job you'll have to pay it off or pat the penalties and taxes that year

    But put off paying that stuff as far into the future as possible

  15. #13
    Before you do anything like raping your 401k, I'd strongly recommend you read the book "The Lies about Money" by Ric Edelman.
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  16. #14

    Transfer your 401k to a Precious Metals 401K

    Do not take your 401K money. You can setup a precious metals 401K and then transfer your money to it. Then buy silver. That is exactly what I have done. The silver is kept in a vault so you own the actual silver.

    I used Goldstar Trust for my precious metals IRA. I bought my silver from Colorado Gold as they have great prices for large purchase but shop around at APMEX and a few other places.

    I bought a combination of American Eagle Silver coins and some bullion but that is your choice.

    Silver is the best way to get as the mining cost is 13-14 per Oz, it is as rare as Gold and getting rarer, and is way under priced.

    I get nothing from this I am just a Christian who did a lot of research and want to help people not get killed from the 100 trillion dollar USD liability we cannot pay without inflating the dollar tremendously (which is what has to happen.

  17. #15
    Quote Originally Posted by Godisnowhere View Post
    Do not take your 401K money. You can setup a precious metals 401K and then transfer your money to it. Then buy silver. That is exactly what I have done. The silver is kept in a vault so you own the actual silver.

    I used Goldstar Trust for my precious metals IRA. I bought my silver from Colorado Gold as they have great prices for large purchase but shop around at APMEX and a few other places.

    I bought a combination of American Eagle Silver coins and some bullion but that is your choice.

    Silver is the best way to get as the mining cost is 13-14 per Oz, it is as rare as Gold and getting rarer, and is way under priced.

    I get nothing from this I am just a Christian who did a lot of research and want to help people not get killed from the 100 trillion dollar USD liability we cannot pay without inflating the dollar tremendously (which is what has to happen.
    God is "now here"

    or "nowhere"?

  18. #16
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    before everyone is screaming to cash out your 401k and convert it to gold do you mind if i ask what is your 401k in? if its agriculture or energy keep your 401k
    Last edited by psi2941; 08-10-2010 at 09:32 AM.



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  20. #17
    Quote Originally Posted by Yukon Cornelius View Post
    As of today, my 401k plan through my employer will allow me to withdraw (not borrow) around 60,000 of my total 401k.

    I will take a bit of a hit on taxes but I really want to get the hell as much as I can out of my company's 401k plan. I would like to maybe use half to do some home improvements (I know this is not an investment) and invest the rest in overseas markets, commodities, etc...

    Thoughts?
    If you roll it directly over into a qualified IRA, then you don't have to pay the penalty or taxes. Or maybe a Roth IRA if you are young, but then you might have to pay some taxes first (but after that everything is tax-free). Use a discount brokerage like ScotTrade or TD Ameritrade and you can invest the money in almost anything you want.
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  21. #18
    Quote Originally Posted by Yukon Cornelius View Post
    As of today, my 401k plan through my employer will allow me to withdraw (not borrow) around 60,000 of my total 401k.

    I will take a bit of a hit on taxes but I really want to get the hell as much as I can out of my company's 401k plan. I would like to maybe use half to do some home improvements (I know this is not an investment) and invest the rest in overseas markets, commodities, etc...

    Thoughts?
    home improvements ARE investments if it's a way to avoid higher costs later in repairs, or a way to charge more on rent in the future.

  22. #19



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