Should retirement assets in 401ks (stocks, etc) be considered a part of liquid net worth?

According to the quicken glossary ( liquid net worth, is defined as "assets that can readily be turned into cash without a major loss in value; therefore, do not include ... funds already earmarked for other purposes."

For a person who is below retirement age and could convert retirement funds to immediate cash with a 40% or so penalty when all tax consequences are figured in, should that money be included or not included in the calculation of liquid net worth?


I should have stated this was hypothetical only. I would never do this, and I imagine others would not unless their circumstances were dire.

It just seems like there are very obvious liquid assets (stocks, bonds, cash) and very obvious non-liquid assets (your primary residence) and 401Ks / IRAs are somewhere inbetween. Just curious if most people viewed that as liquid or non-liquid.

By the way, the quicken definition is not authoritative. Another definition I have seen defines liquid assets as anything you can convert to cash in one week including bonds, etc. Retirements assets certainly can be converted within 1 week.

I guess this is more of a poll than a question. There is no right or wrong answer, I just wanted to see how people out there felt.

12 Answers

  • Anonymous
    1 decade ago
    Favorite Answer

    yes the amount aftee all taxes fees is an liquid asset!!!

  • fenny
    Lv 4
    4 years ago

    Liquid Net Worth

  • 1 decade ago

    That depends on the banker's definition of 'liquid net worth'. Best to ask a banker.

    As far as I am concerned, 401ks, 403bs, or other retirement funds (including IRAs, Roth IRAs, etc.) are NOT considered 'liquid net worth', since they can lose money from penalties and taxes if withdrawn prematurely.

    Liquid net worth would be CDs, bonds, savings, money market funds, and other paper assets including mutual funds, stocks, ETFs, REITS, hedge funds, partnership and ownership shares, and royalties that are NOT in a retirement fund.

  • 1 decade ago

    Using the Quicken definition, I'd consider retirement accounts non-liquid assets. You can liquidate them, but not without great pain in terms of not only current taxes but future cash flow to live on.

    Using Q2007, 401ks and IRAs are considered special types of investment accounts. Althought they're lumped into the same group as taxable investments such as stocks and mutual funds, you can set them aside from your total liquid net asset accounting.

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  • Anonymous
    5 years ago

    For the best answers, search on this site

    Liquid assets are assets that are cash or near cash. Near cash is something, for example a certificate of deposit, that can be converted into cash in a short period of time. Net worth is assets less liabilities. Assets is what you have and liabilites is what you owe. You can lose a lot of sleep over this type of project. Here are a couple of rules of thumbs that might make it go easier. Be conservative on the value of assets. For example, don't think you house is worth 2 times the last sale in your neighborhood. Conversely, be liberal on your liabilities. Include that $ 100 you borrowed from your no-good-cousin- you-are-still-mad-at 20 years ago. If spend a few hours thinking about it and applying my rules of thumbs, yourretirement fund will be happy.

  • googie
    Lv 7
    1 decade ago

    Funds which are "earmarked " for other purposes are not considered" liquid net worth "? Does "earmarked"make funds untouchable except for the purpose for which they were designated.? Retirement funds can be used temporarily provided they are paid back. If not, then the penalties set in which make using such funds a liability. Perhaps accounting designations have changed since 1948 . Assets which were convertible to cash were known as current assets. Net worth applied only to the difference between liabilities and assets, either positive or negative.

  • 1 decade ago

    In terms of accounting, anything that can be converted within a 3 month time frame could be considered liquid. Also, a tip, if you look at the balance sheet, the further away you get from "cash" the less liquid the item is.

  • Anonymous
    1 decade ago

    Nope. Those are not LIQUID assets.

  • 1 decade ago

    yes.. after the withdrawl penalty it is considered liquid assets

    Source(s): Mortgage Loan officer
  • Anonymous
    1 decade ago

    if it's for retirement, why would you want to throw away 30-40% of it now? that makes no sense

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