I got laid off. Now I'm eyeing a 401(k) cash out.

[JoeP]

I'd hit up LinkedIn right away if you haven't already. If you get hired right away, you can take what remains of that 8 weeks severance and build up a good emergency fund.

For the student loan, I would continue paying it as you have been. Do you have other debt?

[snafu]

I'm sorry you'll soon lose employment. I hope you understand we're making suggestions we believe to be in your best interests. This is a very stressful time and there is a lot to do to get re-established and feeling secure.

Did you get the message! The worst thing you could do is cash out your 401k. It is the wrong thing to do for so many reasons.
* It's not a smart financial decision.

*It's a Retirement Fund, it is not a termination allowance. It benefits from a lot of years of compounding to give you the security you will need as a senior. Find out exactly what the custodian has you invested in, fees and MER.
You need to know if you can TRANsfer to a no fee low cost retirement plan in the future when you are again employed and re-established.

*You will be charged both penalty and income tax for cashing out which can take more than 35% of it's value before you pay off one cent.

*You cannot put the money back, ever. The opportunity will be lost forever. No one can attach your retirement account.

Take another route. Cut every non essential spending item. List your expenses & interest rates for April and let us offer suggestions to stretch your income. Will you get any holiday pay with your severance package? What sum do you anticipate?

Can your SLs go to deferment if absolutely necessary? Have you updated your resume? Will your employer offer any termination benefits/counselling? Have you registered with the 'headhunters' in your state? Have you begun to prepare a list of professional contacts? Most new hires are referrals so everyone needs to know you're seeking another position.

Are you willing to relocate? Are you eligible for unemployment benefits? What programs do they offer professionals such as yourself...should they be necessary.

[JBinKC]

I don't know what your reserve cash balance you currently have for your living expenses to buy more time but it appears you have 8 weeks to find another job if you are living paycheck to paycheck . Worry about that before you do anything foolish and as long as the new job can cover your current expenses I would swallow my pride and not be so selective in salary and then just use the job as a stop gap measure (if it is not up to your expectations)to prevent economic disaster.


Hopefully you were fully vested in the 401K. Sometimes I wonder if firms try to dump you before vesting to save on retirement obligations.

Anyhow the cashing out of the 401K would be my absolute last resort. It could push your income likely to a higher tax bracket and you also get hit with the 10% penalty and you also lose the tax deferred power of compounding.