401(k) 403(b) Retirement Money Ask The Get Out of Debt Experts

Should I Take Money Out of My Retirement Account to Pay for a Move? – Sam

Written by Steve Rhode

“Dear Steve,

My wife and I paid off our debts and we don’t want to go there again. I recently found a better job but it is going to involve significant upfront expenses in terms of move etc which is not paid for by the company. I have a 403b from my current employer with about 20K in it. When I leave can I cash out about 10K from the 403b (I understand there will be taxes and fees) and use that money to stay out of debt and have peace of mind starting at the new place and start contributing more towards retirement to make it up. Also can I then roll the remaining 10K to an IRA?

Appreciate your help.

Sam”

Dear Sam,

Congratulations on becoming debt free. I hope you realize that continued use of good credit is not the same as problem debt. You can still enjoy the benefits of having great credit and a good credit score and accessing it when you need to as long as it is affordable.

I’m almost never a fan of tapping the retirement accounts. In my years of helping people since 1994 I’ve witnessed very few that actually replaced the money and got back into the same financial spot they were in before taking the money out.

Considering the cost on lost future value, taxes and penalties, an unsecured loan to cover this move might make a whole lot more sense. I’d take a look at LendingClub.com and if you do decide to go that route, let me know and I’ll help to fund your loan.

Please post your responses and follow-up messages to me on this in the comments section below.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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