[Pablo2079]

I just moved everything around in my 401k to the most conservative that was available. I just figure the time was right. If I'm wrong, no big deal.
I'm considering cutting my contributions way down as the money will probably do me more good now than when I supposedly retire.

[countrysidegirl]

Since I wasn't already in one, I've decided not to contribute. I'd rather purchase "investments" on my own. Course my investments are like more insulation, fruit trees and such.

[MicroHydro]

$this->bbcode_second_pass_quote('countrysidegirl', 'I')'d rather purchase "investments" on my own. Course my investments are like more insulation, fruit trees and such.

[CarlinsDarlin]

countrysidegirl,
That was my thought, too. My investment of my time and money into my home and farm will provide far more returns (starting now) than any retirement plan I might pay into - and not see for another 30 years (if ever.)
Kathy

[lateStarter]

I have already started to draw down on any money in retirement funds. Since I am not working now, my only income for 2005 should show up as a withdrawal from 401k/retirement funds. It will be interesting to see what happens at tax time this year. Since I will be below the poverty level, hopefully the tax bite (if any) will be minimal. If this proves to be the case, I will continue to pay myself instead of working for the man. More time to spend in preparation for the upcoming events.

The remaining money I do have in retirement funds, I will shift to energy type funds (probably coal) just to keep some growth going for the next couple of years. I think once oil and NG prices go thru the roof, coal will start looking awfully attractive despite how dirty it is. If people are given a choice between saving the earth for the future and keeping warm today...

[Pablo2079]

Probably should have said something to my wife, but she doesn't watch the 401k at all. She does (however) notice the size of my paycheck.... and that should go up since I knocked down the contribution to the level at which the company matches and that's it.

It will be interesting to see if it was the right choice (short term)... long term, I know it was.

[frankthetank]

Quit a job...cash in your 401K That's what most people are doing these days. A good sign of a healthy retirement savings plan--no doom here Not that any of us will be retiring...we'll be too busy in the fields!

Marketwatch
$this->bbcode_second_pass_quote('', 'A')lmost half of workers who switched jobs last year cashed out their 401(k) rather than maintain it in a retirement plan, according to a new survey, a move financial planers say can be costly in the long run.

[lateStarter]

That is what I am in the process of doing right now. I am doing it a bit differently though. This year, I retired some annuity accounts that were making a measily 3% and used the money to pay off credit card accounts.

Since I am not working (no income this year) I assume that will put me in a lower tax bracket. I want to see what happens at tax time this year. If it is not too painful, I will continue to draw down other IRA money and use it as my income for that year. I would like to use it for something useful now (rather than just watch it disappear in an instant when things head south).

Basically trying an experiment to see how little money I can get by on in 1 year.

[BabyPeanut]

http://www.sfgate.com/cgi-bin/article.c ... DTAP21.DTL
$this->bbcode_second_pass_quote('', 'A') law that took effect in March is designed to stem the leakage from smaller 401(k) accounts.

When employees leave a company with less than $5,000 in their 401(k) accounts, the employer can kick them out of the plan, and about 87 percent do, according to Hewitt study. (Employers cannot force out former employees who have balances of $5,000 or more.)

Employees who are forced out can take their distribution in cash or roll it over into another tax-sheltered plan.

Under the old law, if terminated employees didn't specify, the employer could send them a cash distribution.

Under the new law, if the balance is between $1,000 and $5,000 and the departed employees don't say how they want their money, the employer must either maintain the account or roll it into an IRA. The employer selects the IRA, but to protect against lawsuits, most employers choose a safer investment like a money market fund or certificate of deposit.

If the balance is less than $1,000, the employer can continue to send the distribution in cash.

Lucas is not sure how effective the new law will be, based on her survey's findings.

[BrownDog]

I think this is a more important statistic than the overall average (almost half):
"Almost three-quarters of those with 401(k) balances less than $10,000 took the cash. That dropped to 8% among those with balances of $50,000 to $60,000."

[hoplite]

I think its the smartest thing you could possibly do. How many of you think that block of 401k money will actually be "there" if you wait 10 more years to get it? or 20???? They have NO qualms whatsoever (they being TPTB) about taking away pensions (including SSI) what makes you think they won't take 401k reserves?

Company I work for is getting so squirrelly about the 401k "match" they promised, I'm thinking about quitting just so I can salvage my 401k and cash out before the collapse- seriously.

[falser]

I'm starting to get pretty worried about the economic storm that's coming down the pipe, particularly the US dollar decline. I have a fair amount of investments that are locked into retirement accounts. I just recently rebalanced my 401K to 90% international stocks for the short term, but I'm not even sure if this is a prudent thing to do long term. I'm becoming more experienced in the stock market and believe my money is safer in my own hands than in the hands of a retirement company (who obviously wouldn't want me taking my money away from them).

One of the things I want to do very soon is completely cash out of the US Dollar. I'm a Canadian working in the US, so I can fairly easily just shoot my money over the border and invest it there (bye bye nasty USD!). I foresee the USD dropping another 20% against the CAD within 1 or 2 years, thus becoming 1:1. So I believe this would be a smart move to do. I've been waiting, and waiting for the USD to recover more than it has but alas it seems to be heading south again.

Cashing out my 401K is a bit of a problem, obviously. The money my employer has contributed isn't completely vested. And from what I know I'm going to get hit extremely hard with fines & taxes. I'm okay with that, assuming that the fines aren't much more than 20% (after taxes) because I'll still be better off assuming the USD does collapse.

Does any of these plans make any sense? Are any of you guys cashing out your 401K's in anticipation of these near term economic problems?

[Heineken]

It's unwise to cash out your 401(k) until you're 59 1/2 (in the U.S., at least). There are huge penalties for doing so. On the other hand, you don't have to have your 401(k) in stocks. Get out of the stock accounts (including the international ones, which are also very risky if we have a global recession or depression) as a first step. I wouldn't dream of owning stocks in such an account at this point. I haven't owned stocks in my employer's 401(k) for years. I contribute 16% and my employer matches 6%, and when you add in 3% or 4% annual interest, that's enough of a gain for me!

You may also have the option of rolling over your 401(k) money into an annuity, which is what I plan to do when I retire at the end of this year.

As a hedge against the currency crises you allude to, buy physical gold (at least 10% of your total assets).

[Tyler_JC]

90% stocks regardless of PO is risky.

And it depends which international stocks.

If it's Japanese car companies and Chinese internet company stocks...

Also, we have to know how old you are. The investment advice for a 30-year-old is different than for someone nearly retirement.

Think of this as the Suze Orman Show. We have to know your situation in order to give decent advice.

An annuity is not a good idea if you are not close to retirement. Inflation (real inflation, not the government's fuzzy math) will be fairly high during all of this. If we have an economic slowdown, the government will be forced to inflated the dollar in order to pay the massive deficits and to prop up the housing market.

An annuity would not be the way to go in that situation.

Also, how much do you owe on your house? If it is mostly paid off but in an overpriced market, you may want to consider downsizing.

[Egon_1]

I am thinking about cash out my 401K/IRA accounts also.

One thing that came to me: a good bit of the penaties are taxes that would be collected at the end of the year. If you cash out your account(s) at the beginning of the year and re-invest in something that gives good returns, then your gains over the coming year would help offset the penalties you eventually pay. If you invested in oil or other resource futures, you might be able to more than pay off the penalties!

I have not done any analysis, and I have not researched the actual timing of when penalties are paid, but I think the concept is solid IMHO.

[Heineken]

$this->bbcode_second_pass_quote('Tyler_JC', '
')An annuity is not a good idea if you are not close to retirement. Inflation (real inflation, not the government's fuzzy math) will be fairly high during all of this. If we have an economic slowdown, the government will be forced to inflated the dollar in order to pay the massive deficits and to prop up the housing market.

[FoxV]

I think Cashing out of your plan is going to kill you with taxes so its best to just shift to more secure investments.

Your best bet is as always gold, although I'm not sure if its possible to shift a 401K to gold.
I guess the next safest bet would be foreign bonds particularly Canada and (and maybe Euro based bonds, but I'm not sure)
Another safe bet is precious metal stocks.
And next would be energy, but I have some short term "iffyness" about that

I'm currently recommending people to move their investments into safer areas as well. I think this fall is going to be pretty wild to watch.

in the end, when there is a stockmarket crash (housing bubble, high heating/gasoline price instigated), oil and energy stocks are also going to decline as well because a global economic crash is going to kill oil demand in the short term (oil demand will pick up with the economic recovery until PO causes a second crash and long emergency begins).

The big wild card in this is Iran. If Iran is attacked several months after the crash then I think things will play out as above (my survival plans are based on it). If Iran is attacked before the crash (or soon after), then energy stocks (and oil) will go through the roof (we'll still have the crash, but my plans are screwed)

(apologies in advanced if this is repetitive or contradictory to other posts, it took a long time for me to submit it)

[Heineken]

$this->bbcode_second_pass_quote('Egon_1', 'I') am thinking about cash out my 401K/IRA accounts also.

One thing that came to me: a good bit of the penaties are taxes that would be collected at the end of the year. If you cash out your account(s) at the beginning of the year and re-invest in something that gives good returns, then your gains over the coming year would help offset the penalties you eventually pay. If you invested in oil or other resource futures, you might be able to more than pay off the penalties!

I have not done any analysis, and I have not researched the actual timing of when penalties are paid, but I think the concept is solid IMHO.

[Heineken]

$this->bbcode_second_pass_quote('FoxV', 'I') think Cashing out of your plan is going to kill you with taxes so its best to just shift to more secure investments.

Your best bet is as always gold, although I'm not sure if its possible to shift a 401K to gold.
I guess the next safest bet would be foreign bonds particularly Canada and (and maybe Euro based bonds, but I'm not sure)
Another safe bet is precious metal stocks.
And next would be energy, but I have some short term "iffyness" about that

I'm currently recommending people to move their investments into safer areas as well. I think this fall is going to be pretty wild to watch.

in the end, when there is a stockmarket crash (housing bubble, high heating/gasoline price instigated), oil and energy stocks are also going to decline as well because a global economic crash is going to kill oil demand in the short term (oil demand will pick up with the economic recovery until PO causes a second crash and long emergency begins).

The big wild card in this is Iran. If Iran is attacked several months after the crash then I think things will play out as above (my survival plans are based on it). If Iran is attacked before the crash (or soon after), then energy stocks (and oil) will go through the roof (we'll still have the crash, but my plans are screwed)

(apologies in advanced if this is repetitive or contradictory to other posts, it took a long time for me to submit it)

[falser]

I understand what you guys are saying, but it all ends up sounding similar to what general investment advisors say - stay the long course etc. I think that is quickly becoming unwise advice, especially when you are fairly certain that an economic crisis is on the verge of beginning. I strongly believe sometime later this year inflation will start to pick up huge and the US dollar will begin to freefall and I don't want any exposure to the US market by this time.

To give some background, I'm 27 and have been working since I was 19. I have no house, because I've moved around so much, all my savings are 100% liquid investments (Canadian RRSP retirement plan, Canadian mutual funds, 401K plan, US Stock Market and US Cash/Income). I'm beginning to view any of my USD investments as a losing venture. I already have a decent amount of money in my Canadian retirement plan, I won't cash that out near term. So I don't think I'll be needing my US 401K plan. What good will it be in 20-30 years when the US economy is completely wrecked and the funds and USD (compared to CAD) are crushed? Whereas I expect the Canadian economy to continue being better for the next 5-10 years due to it's oil & commodity assets.

Do any of you know what the actual penalties are for cashing out a 401K? I thought it would be any capital gains taxes + 10%. My employer has contributed probably 20%+ of my account value, so this would offset plenty of the fines. I imagine I could earn another 10% or more back in the stock market within a year by just investing into Canadian oil stocks.