in the middle of 2008 I was advising people to cash in their 401Ks and take the tax hit because that was exactly what I was doing at that time – let’s see, took a 15% tax hit and avoided a 30-50% decline in the equity markets – again, not bad advice in hindsight.
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What’s the “tax hit” associated with cashing in a 401K? All transactions that take place within a 401K are tax-free. That’s why you put them into a 401K. Please explain.
If you fully cash out a 401K (that is, you withdraw your capital from the 401K) then you have to pay a 10% early withdrawal penalty PLUS the marginal income tax rate (as if the withdrawal were regular income) PLUS the capital no longer has tax advantaged status. That’s going to be a hell of a lot more than a 15% tax hit.
I guess what I’m asking is… What in the wide wide world of sports are you talking about? This part of your post makes no sense whatsoever.
