Anonymous
Anonymous asked in Business & FinanceInvesting · 1 month ago

if are retired,,,would it be a great idea to take all your money out of your 401K right now? why or not?

Update:

have heard that the stock market is likely to crash harder than its history soon....and many think that..why?

Update 2:

why do many investors still remain very bullish on the stock market? they think the Fed. will just keep pumping money into the economy? why

14 Answers

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  • Anonymous
    1 month ago
    Favorite Answer

    Why would anyone take all their money out of their 401k?  That would be idiotic in terms of taxes.

    Anyone who thinks the stock market is going to crash can change how their money is invested within their 401k without paying any income tax.

    If someone really wanted to take all their money out of their 401k (such as in a Roth conversion), waiting until the market crashes would be wise.  Again, less taxes. 

  • 1 month ago

    If the market should drop after the election, the odds are that it will recover over the next few years. Why take that risk? Should you withdraw the funds from a tax-sheltered account you'll owe a hefty tax on it and you won't get any return to speak of as bonds and banks are payng nothing now.

  • 1 month ago

    How much of an annuity is that 401K providing for you?  Is it being taxed when you get your monthly payments? How much is in the 401K now? Have you discussed what your future is like with a certified financial advisor? Do you want to use the money for something--such as paying bills, or paying down your mortgage, or even buying a home?  These are all factors to consider. If the income it generates for you is not much, and if you have debts you'd like to get rid of, then taking a lump-sum distribution might be a pretty good idea. Your taxes should NOT be the main concern here--after age 59-1/2, the taxes are minimal in most places. After you are already on Social Security, they should be fairly low. Taking it out simply to invest it might be a very BAD idea--especially when the country's future is so undecided. 

    Talk to someone who can better evaluate your personal situation and let you know whether taking this money out is a good idea.  Only they can see the whole picture. 

  • kswck2
    Lv 7
    1 month ago

    Well, if you take it all out, you have to pay taxes on it. Then what do you do with it?

    A market crash like 1929 will not happen again. It was caused by some investors trying to manipulate specific industries with insider information. The SEC has made those practices illegal. But, there Will be corrections-sometimes rather large, like the one at the beginning of COVID-which was more of a knee jerk reaction, since no one really understood what was going on. And it has since recovered. 

    The market is historically Bullish-and historically it goes up. There are bad years, yes, but way more good ones too. 

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  • Amy
    Lv 7
    1 month ago

    I think you mean sell stocks for cash WITHIN your 401(k).

    To withdraw the resulting cash would incur a huge tax bill. The whole point of a 401(k) is to reduce your taxes by spreading your income over more years. Taking it all out at once does the opposite.

  • 1 month ago

    No.  When you take it out of the 401K, you have to pay tax on it.

  • 1 month ago

    Not with the penalties in place. 

  • 1 month ago

    You should do it as gradually as possible.  It you remove all your $, you might enter a MUCH higher income tax bracket.

  • 1 month ago

    1)  There may be a reason to not be in stocks in your retirement accounts due to your age and personal risk tolerance.

    2)  There is hardly ever a reason to cash out your 401k all at once.  Even if you are over age 59.5, the tax bill will kill you.

  • 1 month ago

    You can most likely convert to bonds or a cash fund within your 401K.  That is at least until the Dems confiscate it, and replace it with some sort of cheap a** "guaranteed" government annuity. 

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