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Old 05-11-2018, 01:58 PM
 
8,231 posts, read 4,160,625 times
Reputation: 1876

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Hi, I am considering withdrawing from my 403B to clear out my credit card bills. I had a 2 yr plan to pay them all off. However, paying $10K a year for school and holding off for the 2nd year n half of school to pay it with financial aid. So that way have 0 cost when I finish school.

Plan would be I am paying way above the min. on my credit cards. Was debating to apply to a consolidated loan for $300 a month for 24 months with a 7% interest rate. However, thinking of keeping my credit cards and paying the minimum. With that said at the end of each semester be eligible for $2100 from work (Total of $4200 a year). With the $4200 and my 403B could pay off my credit card debt completely by June 2019.

Question is it a smart investment...Now I know it is taboo to touch a 403B. My thinking is this going to school for nursing I plan to be done by the time I am 33. Plan on staying in the nursing field till I am 70. That is about 40 years! Also possibly looking at doing 20 to 25 years in the military as a nurse hopefully is my long term goal. Even if that doesn't pan out when I do start out as a nurse will be making 30 to 40 percent more a year. Figure in a 30 year time frame I will be making close to 92% more if I worked 30 years at my current salary base. That is a lot to contribute to a 403B in 30 years.

I don't believe I be losing out in retirement funds if I withdrew now. I still have to meet with a financial adviser before I can withdraw. However, still seeking some feedback on this thought process.
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Old 05-11-2018, 02:02 PM
 
17,635 posts, read 12,234,437 times
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How much of a withdrawal are we talking? And why would it take another year beyond the 403b withdrawal to pay off the cards? You do realize your withdrawal will have a 10% penalty plus it will be added to your taxable income right?
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Old 05-11-2018, 02:39 PM
 
8,231 posts, read 4,160,625 times
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Yes aware of that be $3600 total after withdrawl.
Have $8K in debt. I would be able to pay it off in 2 years. However, figure take the opportunity to attend school and yield a greater investment.

I am not liking it...With my tuition reimbursement be $8400 in course of 2 years plus $3600 all my debt would be paid off and have about $2K left for school.
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Old 05-11-2018, 05:55 PM
 
3,483 posts, read 1,990,917 times
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Rund,

I'm not sure I follow your reasoning at all.

And do you really think you can take nursing until you are age 70? Your feet, back and who knows what else may not let you.

I would NOT under ant circumstances touch the 403B. Leave it let it grow and compund,for your retirement, you may be tired of nursing by age 60.

What's just wrong with just paying your credit cards,off as you go?

And if taking the 403B money still means you have to make payments for several months on the credit cards, I'm afraid it's not enough?

I may not understand what you're getting at, but I'd leave the 403b alone, work extra weekend shifts or something and pay off the credit cards and then the student loans over time.

You won't ever regret having extra money in retirement!!!

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Old 05-12-2018, 01:05 AM
 
24,753 posts, read 26,824,957 times
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I'm totally with galaxyhi here. LEAVE THAT 403B MONEY ALONE! After you pay income tax and penalties on it, it's not worth it.

I know it's harsh for me to say, but stop looking for a quick fix for your financial problems. There isn't one.

And there's a good chance you'll want to retire before age 60. My sister works in the medical field and she's burned out and not even 50 yet. But she didn't start saving for retirement until she was 40. She is paying a heavy price now for not saving/investing when younger. (I tried to tell her, but she didn't listen). Let that money compound for you, so you won't have to work so hard when you get older.

Now, if you need to stop contributing for a while, that's understandable. But leave that money invested.
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Old 05-12-2018, 08:33 AM
 
1,458 posts, read 515,171 times
Reputation: 4811
My son has been a nurse for thirteen years. He is now 38 and beginning to develop back problems. Most types of direct patient care in the hospital can be brutal physically. He has worked in CICU and on the floors. If you do go into nursing, have a plan to transition into administration or some type of office-based nursing. Your feet, legs, and back will thank you.

I am joining the “leave it alone” camp. Besides the tax and penalty, raiding a retirement account isn’t a good habit to get into. If you do it once, you will be tempted to do it again.

Best wishes.
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Old 05-12-2018, 08:44 AM
 
Location: Warwick, RI
2,546 posts, read 3,860,531 times
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Only you know what's best for your situation, but for what it's worth, I'd leave the 403B money alone. The tax and penalty are the LEAST of your concerns - at your young age, withdrawing that much money now would cost you 10 TIMES that amount over the long term in lost investment gains.


Leave that money in the 403B and invest it wisely, and let the power of compounding be your friend. You might not like that idea much now, but years down the road, your older self with thank you. You'll need that money much more then than you do now. Good luck!
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Old 05-12-2018, 11:40 AM
 
1,937 posts, read 1,329,497 times
Reputation: 3045
Quote:
Originally Posted by RunD1987 View Post
Hi, I am considering withdrawing from my 403B to clear out my credit card bills. I had a 2 yr plan to pay them all off. However, paying $10K a year for school and holding off for the 2nd year n half of school to pay it with financial aid. So that way have 0 cost when I finish school.

Plan would be I am paying way above the min. on my credit cards. Was debating to apply to a consolidated loan for $300 a month for 24 months with a 7% interest rate. However, thinking of keeping my credit cards and paying the minimum. With that said at the end of each semester be eligible for $2100 from work (Total of $4200 a year). With the $4200 and my 403B could pay off my credit card debt completely by June 2019.

Question is it a smart investment...Now I know it is taboo to touch a 403B. My thinking is this going to school for nursing I plan to be done by the time I am 33. Plan on staying in the nursing field till I am 70. That is about 40 years! Also possibly looking at doing 20 to 25 years in the military as a nurse hopefully is my long term goal. Even if that doesn't pan out when I do start out as a nurse will be making 30 to 40 percent more a year. Figure in a 30 year time frame I will be making close to 92% more if I worked 30 years at my current salary base. That is a lot to contribute to a 403B in 30 years.

I don't believe I be losing out in retirement funds if I withdrew now. I still have to meet with a financial adviser before I can withdraw. However, still seeking some feedback on this thought process.
Can you take a 403 loan instead of a distribution? You have to talk to your 403 administrator to find out if your plan allows loans. The IRS limits how much you can borrow from your 403(b) at any one time. Generally, you're limited to the smaller of 50 percent of your vested balance or $50,000. However, if you have less than $10,000, you can borrow up to your account balance. You may take tax-free withdrawals without early withdrawal penalties if you have held the account for five years.

It's not necessarily a bad thing to do.... BUT.... If you do it, cut the cards up and never use them again. Get the 4200 bucks together first THEN do the 403 withdrawal and pay the cards off immediately. Who knows? Don't take out the consolidation loan until next year either.
Who knows? Something horrible could be happen and you pay the cards off and then end up maxing them out again and have the loan and the cards again. Maybe in a year, something will happen and you either won't have the 4200 or you'll find a way to get it all without a withdrawal. The extra year gives you some time to consider it and avoid the unforeseeable. You'll have a smaller (hopefully) card debt to repay. But DO NOT withdraw the 403 until you have the other money together (I'm sure this way obvious to you; I'm just sayin...) Maybe you could throw in your tax refund money to help out???

Do the math. That's where the rubber meets the road. See which way saves you money? How much is the amount you want to withdraw? What's the annual interest you're paying? How high is your tax bracket? The reason for this is because you will potentially pay a 35% penalty if you're in the 25 percent bracket. If the debt is enormous, I can't see how you'd lose out with a withdrawal. At worse, you'd break even I bet.

You're young enough to recover from the loss of the 403 money, if you save diligently after finishing school. You can make up the loss.

If the cards are a huge burden, jeopardizing your finishing school, then pay them off. Believe me, you can make up the money. ESPECIALLY if you become an officer in the military.

Last edited by Led Zeppelin; 05-12-2018 at 11:58 AM..
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Old 05-12-2018, 11:48 AM
 
17,635 posts, read 12,234,437 times
Reputation: 12870
Quote:
Originally Posted by Led Zeppelin View Post
You may take tax-free withdrawals from your Roth 403(b) account without early withdrawal penalties if you have held the account for five years.

It's not necessarily a bad thing to do.... BUT.... If you do it, cut the cards up and never use them again. Get the 4200 bucks together first THEN do the 403 withdrawal and pay it off immediately. Who know? Maybe in a year, something will happen and you either won't have the 4200 or you'll find a way to get it all without a withdrawal. The extra year gives you some time to consider it. but DO NOT withdraw the 403 until you have the other money together (I'm sure this way obvious to you; I'm just sayin...) Maybe you could throw in your tax refund money to help out???

Do the math. That's where the rubber meets the road. See which way saves you money? How much is the amount you want to withdraw? What's the annual interest you're paying? How high is your tax bracket? The reason for this is because you will potentially pay a 35% penalty if you're in the 25 percent bracket. If the debt is enormous, I can't see how you'd lose out with a withdrawal. At worse, you'd break even I bet.

You're young enough to recover from the loss of the 403 money, if you save diligently after finishing school. You can make up the loss.

If the cards are a huge burden, jeopardizing your finishing school, then pay them off. Believe me, you can make up the money. ESPECIALLY if you become an officer in the military.

I didnít catch where the op said it was a Roth 403b. The tax free withdrawals would only apply to contributions right? Surely you canít withdraw earnings tax free early
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Old 05-12-2018, 12:35 PM
 
1,937 posts, read 1,329,497 times
Reputation: 3045
Quote:
Originally Posted by Lowexpectations View Post
I didnít catch where the op said it was a Roth 403b. The tax free withdrawals would only apply to contributions right? Surely you canít withdraw earnings tax free early
He said it was a 403b in the first sentence.
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