I let Allstate and need to rollover my 401k. What if I cash out my entire 401k and buy a rental property? I’m under 35, have a decent job and low debt.
I’m sick of the corporate grind, and interested in building a rental portfolio
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You need to talk to your financial advisor. Just know that if you have a traditional 401K you'd have to pay taxes (assume 25%) on your withdrawal and no matter what type of account you have (traditional or Roth) there's a penalty for withdrawing earnings if you're under age 59. Be careful or you could owe thousands when you file your taxes next year. Not to mention you're way better off letting your retirement funds grow over the next 2-3 decades.
It depends on the number of factors. Don’t take the advice of anybody on this thread. You need to speak with someone in financial planning who is also an expert in taxes
Look into rolling your 401k directly into a self-directed IRA. With this type of IRA you can invest in real estate without paying taxes and early withdrawal fees.
And here we were led to believe the younger generation knew it all, yet they come to this site for basic tax law. Hey millennials….ever hear of google?
I actually did this when I left a different carrier to get out of the corporate grind, only I bought a condo for myself outright. I got HAMMERED when I did my taxes, I owed like 10k. Now I am building my 401k and it’s only like 30k and I’m in my late 30s, not good. Rental properties are barely with it, you get one bad tenant and you are boned until you can evict then. I would keep doing what you’re doing, keep your expenses low but keep saving in the 401k
You will pay taxes PLUS a4 10% early withdrawal penalty on the money. If you roll it over, you won't. At 59.5 you can withdraw without the penalty. There's more but this is what applies to you right now.
Get a low interest loan now before rates go up & you will come out ahead. Get on it because rates are going up.
xqs+1faHpkN6 Did you really feel the need to respond? Don’t like it? Just keep scrolling. It doesn’t take much to be a decent human.
Take out a loan on your 401k pay yourself some interest but don’t cash it in. Too expensive with taxes
You’re going to be stuck with taxes to pay on the withdrawal if you do. Better to roll it over to a Roth or traditional IRA and get a loan for the down payment for the rental. Keep your day job until you have enough positive cash flow for the rental(s) to replace it.
This isn't a financial advice website