It's all about the Benjamins ...

[Maigret Man]

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Greetings,

I have a question and I could use some feedback. I am taking a post-bacc premed program now. I am looking to leave my non-medical full-time job and get a job in research. My rub is I won't get the same money. Would you suggest dipping into my 401K funds or taking some loans to cover expenses? Could I get some student loans to hope me make ends meet? If you have grappled with this, please let me know what you did.

Thanks for any guidance you can provide!

 

[sunnyjohn]

"STEP AWAY FROM THE 401(K)!"

You can get enough student loans to cover expenses during a post-bacc...


The smart folks on the forum will soon chime in with advice! 😛

Agape

 

[daffy]

Greetings,

I have a question and I could use some feedback. I am taking a post-bacc premed program now. I am looking to leave my non-medical full-time job and get a job in research. My rub is I won't get the same money. Would you suggest dipping into my 401K funds or taking some loans to cover expenses? Could I get some student loans to hope me make ends meet? If you have grappled with this, please let me know what you did.

Thanks for any guidance you can provide!

Check with your 401K to see if you can withdraw after you are off of work (most likekly no). In this case you have to take it out now and start paying back now. Is it a good time now (mutual funds, stock)? The only very very good thing abt 401K is that the interest you pay back goes back into your 401K account. But you have to start paying back today.

Student loans - rates are good now. And you pay back when you graduate and start work.

Interest aqcuired thru the life of the loans (both student and 401K) is tax deductable (not 100%).

I'm going with student loans.

Hope this helps
Have a good one everyone and good luck
daffy

 

[liverotcod]

In most cases, you can opt for a complete lump sum disbursement from your 401k when you leave your job. The tax consequences may be pretty grave, but if you're spending it on tuition, then I think it's mitigated. I need to do a little research on this myself, as I intend to cash mine out. If you find anything else out, post it!

 

[Trismegistus4]

Yes, you can take your 401(k) in cash when you leave your job. (It sounds like daffy was referring to another 401(k) option, that of taking a loan out from the account, which wouldn't make sense in this case.) The drawback to the cash disbursement is that you pay a 20% up-front tax penalty, and then the following April, when it's time to settle with Uncle Sam, the amount you did get is taxed again. Whether that second tax is as income or as capital gains, I'm not sure, but you need to know it's coming so that you don't complete your return and suddenly find that you owe a bunch of money you no longer have.

Still, this is the option I will be taking. I figure it's worth it if it will enable me to complete my post-bacc without taking out loans. In doing so, I'm basically betting that, 10 years from now, when I'm finally entering practice, it will still be possible to join a private group as an anesthesiologist and make ~$250k/year. If so, it will have been worth it to drain the 401(k) now. If we all end up being forced to work for Hillary with our incomes capped at $90k, it will probably have been better to leave the 401(k) alone, compounding for those 10 years. But it's a risk I'm willing to take.

I'll be resigning from my job on Monday, so I'll be learning exactly how taking this disbursement works soon. I'll post the details when I learn them.

 

[daffy]

Yes, you can take your 401(k) in cash when you leave your job. (It sounds like daffy was referring to another 401(k) option, that of taking a loan out from the account, which wouldn't make sense in this case.) The drawback to the cash disbursement is that you pay a 20% up-front tax penalty, and then the following April, when it's time to settle with Uncle Sam, the amount you did get is taxed again. Whether that second tax is as income or as capital gains, I'm not sure, but you need to know it's coming so that you don't complete your return and suddenly find that you owe a bunch of money you no longer have.

Still, this is the option I will be taking. I figure it's worth it if it will enable me to complete my post-bacc without taking out loans. In doing so, I'm basically betting that, 10 years from now, when I'm finally entering practice, it will still be possible to join a private group as an anesthesiologist and make ~$250k/year. If so, it will have been worth it to drain the 401(k) now. If we all end up being forced to work for Hillary with our incomes capped at $90k, it will probably have been better to leave the 401(k) alone, compounding for those 10 years. But it's a risk I'm willing to take.

I'll be resigning from my job on Monday, so I'll be learning exactly how taking this disbursement works soon. I'll post the details when I learn them.

Hi guys,

To clarify - I was discussing the option of taking a loan against the 401K not draining it out (I didn't even consider this, yet) - and it doesn;t make sense in my case. My logic was - the 401K is distributed in different funds which flactuate with the market (there is a potention of going up or down). If I take a loan against it I am pulling money off of the market. Vs if I take a student loan, let's say for $30K in 5 yrs when I start paying it back considering inflation and rates it might not be too bad (it could work the oposite way as well and be very bad). Again this is a risk we should all calculate.

As Trismegistus4 states draining it out will mean tons of penalties. This needs to be researched further.

Trismegistus4 best of luck today, let us know how it goes.

Have a good one guys