Think twice before Taking 401k loan or IRA Early Withdrawal

Millions of Americams have built up 401k retirement accounts and IRA’s.  I recently saw an article describing how more and more people have taken out loans against their 401K’s.  As a Ft. Lauderdale bankruptcy attorney, I have routinely seen clients who are strapped by payroll deductions for 401k loans.  Also, I have seen clients withdraw large sums of moneys from IRAs to pay bills.  This creates a tax penalty and income tax liability and also depletes retirement accounts.

Now it may often be true that these loans and withdrawals can solve the debt problem in particular cases.  But all too often these actions merely delay the inevitable crushing burden of debt.  Retirement assets are depleted, income taxes are owed, and the individual still must file bankruptcy. 

I strongly recommend that any one who considers borrowing from a 401k or making an early withdrawal from an IRA first consult with a Ft.Lauderdale bankruptcy attorney or other professional.

Leave a Reply

Your email address will not be published. Required fields are marked *