401k to pay?.?.?.?

[Wheetsin 714]

Questions like this are so hard to answer because it depends so much on your financial situation, other avenues available, your ability to make payments, credit score, etc.

Just keep in mind that situations change, regardless of how good intentions are, and make sure you know as much as you possibly can before making a decision.

For example, understand what your tax penalties are going to look like if, for some reason, you don't manage to replace the money you borrow out.

Understand how your cafeteria plan works and make sure you're using it as much as you can if you know you will be self-pay (and even if you won't -- I don't use mine because I never wanted the risk of losing the money and I don't mind paying the taxes on the relatively small amount of would-be withholdings -- but if my situation were different or I were on a tight budget and knew I would have at least X in copays & OOP expenses, bet your butt I'd be using it).

Understand the total payout differences between what a low APR loan would run you vs. what your 401k interest will.

And also - having a loan in your name doesn't necessarily impact your credit rating, so if that's an avenue you'd wan tto consider there's no reason to rule it out completely. If you have a good record of paying on time, especially significant loan amounts, it can actually raise your score.

[cutiern 0]

hey wheetsin!

i decided to go with CapitalOne Healthcare Finance loan. i have 2 years @ 3.9% interest for $14,500(dr's total). the total interest on the loan is only $650. this will be better for me. i can make payments early without penalty, so i will hopefully have it payed off before two years(i want to buy a new car). i decided it's more trouble than it's worth to mess with my 401k. wish me luck, my surgery is on june 5th!

cutiern:biggrin1:

[Constance 0]

What do your montlhy payments work out to be? (I could look it up but I'm lazy)

[luv2bingo07 0]

Hi all,

I hope someone gets this post because it is rather old. I am looking into withdrawing most of what I have in my 401k for surgery in MX with Dr. Ortiz. I have completely ran out of options for financing(denied twice even with a co-signer), and my credit is so bad that every time I turn around, I am being garnished by someone.

What I am wondering about is, if I can take that money out of my 401k account without penalty by just saying I will be responsible with paying the taxes next year. I was told by my employer that I would have a financial hardship to do this, but if it is taxed for penalties, then I am stuck again by coming up short for having the surgery.

I am to get a letter from my doctor stating my medical financial hardship and then give it to my employer to review with the board and make a decision about getting that money.

I hope and pray it will work out.

Peace,

Judy

[musicalmomma 1]

I don't think there's any way around the penalty...and a serious tax hit!! Several years ago...my husband (ex husband now) took out a hardship withdrawal to try to get our butts out of bankruptcy (didn't work)...any way...there was not only a penalty, but at tax time, when we usually got a large tax return, we ended up with very little return. Now, thankfully we didn't end up owing the IRS, but MANY have ended up owing them after a withdrawal. Now this was the early 90's, so perhaps some of the laws and regulations have changed. I know my present husband's 401k won't even allow a withdrawal unless you are going to lose your home or your life.

I hadn't thought of the idea of a loan to cover what insurance won't tho! That's a good idea! Then again...I'm always getting offers in the mail for 0% for a year. So perhaps if we get hit with a huge bill, we'll do that...

OK...I've rambled on long enough!

Good luck with your 401k...I pray it all works out for you!

[sunnysea 1]

My Husband and I are dumb + dumber when it comes to this subject! With out getting into too much detail, we had to dip into his 401k this past year for other reasons. And we were warned about taxes so we had that figured in to be covered. Anyhow come tax time we usually get back around $3,000 that we depend on each year, well surprise, surprise, we owe State $8,000:faint: :faint: :faint: It seems the people that advised us forgot that they don't take or consider the State taxes to be covered:rolleyes Talk about stupid:eek: Just make sure of every detail first. I am:embarassed: :embarassed: :embarassed: even talking about this, I just wanted to warn you to check every detail, I wish at least one of the:bandit 's that helped us would of!!!!!!!!!!!!!!!! Sunnysea

[Fauxnaif 1]

We used my husband's 401K. It was a life-saver. But we didn't withdraw; we borrowed it and paid it back.

[ralheit 1]

I didn't have to use my 401K for surgery, but I did have a loan on my 401K. Then after 22 years I was downsized at work. Now I have an outstanding loan that if not paid in 60 days becomes taxable income and I will have the 10% penalty added to that. It will still cost less than paying the loan off, but will kill my refund for next year.

[Tired_Old_Man 1]

If you are working and your company deducts your 401k contributions from your paycheck and they handle the loan repayment, it is a great way to pay for the band. If I were you, I would increase by a few dollars, your paycheck deductions to help even things out for retirement. A few more dollars a week when young, can add up to a lot at retirement. Add half the monthly food cost savings to your 401k deduction.

[luv2bingo07 0]

I'm using money from my 401K. My thinking is that if I don't get weight off I won't make it until retirement or I won't be healthly enough to enjoy it. Invest in yourself you are worth it!

How did you go about getting your money from your 401k? I was told I need a letter from my doctor stating what it says about medical hardship in my 401k rules and why I need this money for the surgery. I am looking to having surgery with Dr. Ortiz also. THe 401k money is my only hope and I really hope it doesn't cost me my job or I am severely taxed on it.

Peace,

Judy

[Kat817 19]

I think you only need the letter if you plan to totally withdraw the entire account. We have taken a loan out of ours before, and it required nothing but a click of the button on the computer! You can take out a loan of up to 50% of what you have in your 401K if you are fully vested, is how ours works. We have never attempted to totally withdraw it---so I have no idea. I know there are no penalties if it is for education or to buy a primary residence....but that's all I know. When he changed jobs, the new place, got all of his paperwork in order, he signed it, and the 401K rolled right on over into the new job. Now that has been many years ago---so a lot might have changed since then.

We seriously thought about using ours---but other methods fell into place for us. I recieved a medical settlement from a car accident I was injured in. Used it-----soooooo worth it!!!

Kat

[luv2bingo07 0]

Thanks so much Kat and big congrats on your weight loss and how it all worked out for you!

I really hope that is all I need is the letter, but not totally sure how my doctor would write it up and what to put into it without getting too personal.

Take care and keep up the good work!

Judy

[Chris61 0]

If you are self pay, I would try and talk to the doctor and also with the clinic to see if you can work out a payment plan. Also I would look at the loan part with 401K. Also keep in mind you will be able to take off on your taxes and might get money back. You will need to read about the medical ded under the IRS and your State. Also keep in mind that if you make $30,000 for example and you take all out say 50,000 then your income has gone up to $80,000 for the year. Thats what hurts a lot of people with having to pay taxes. This would also go with the state tax also.

I hope that this has helped you out.

Chris

Pre Band St. Louis

[Boo 3]

I'm using money from my 401K. My thinking is that if I don't get weight off I won't make it until retirement or I won't be healthly enough to enjoy it. Invest in yourself you are worth it!

JulieLu, you are very wise!

[TracyinKS 7]

If you are a long way from retirement then I don't see a problem using your 401K to fund your surgery, and yes are paying yourself back the interest, and no you won't be "growing" the money you take out in the stock and mutual fund markets they are curently enrolled in... BUT you are making back the interest, it IS YOUR MONEY, It does NOT show on your credit report...

There are differences in plans, and in loan rules.. most all have these types..

Borrow up to 50% of your vested balance (YOUR MONEY, NOT your employers matching funds)

For a down payment on a house: typically you have up to 15 years to pay it back.

For a general loan 3-5 years is pretty common

Hardship Cashout: Doesn't have to be paid back (at least not in my plan)

What happens if I have a loan and then I change/get laid off of my current job.. and DON'T want to pay it back?

- The proceeds of the loan counts as INCOME plus you will also be hit with all the tax penalties which means that come 4/15, you could end up OWING A LOT if you are under age 55.5 years old, but Like Kats hubby.. you could roll it right over to the new company (if they are set up for it and continue on)

(I put $3900 in my Flex Spending Account) which covers my annual out of pocket max for insurance. It is $150 pre-tax per paycheck....... which is stretching my budget a little thin.. but at least it will be paid for in a YEAR.