401K based on company performance

[cbg]

No. Repayment of student loans do not qualify for a hardship withdrawal under any circumstances whatsoever.

If your employment ends you would be able to cash out the 401k but you would pay both taxes and penalty.

 

[rppearso]

So if a laid off does not constitue a hardship what does, I cant think of anything that would present more of a hardship than the loss of your income?

 

[cbg]

That's not what is meant by a hardship withdrawal.

Perhaps this will help.

401khelpcenter.com - Hardship Withdrawals Give Access to Your 401k Savings, But at a Cost

You are simply not going to be able to use 401k money to pay off your student loans unless you pay tax and penalty on it. Argue with the Feds, not me. I don't make the rules.

 

[rppearso]

I read the article and hardship does apply to being unemployed and out of options (loans, avoidance of forclosure, etc). Also I thought the assumed ROR of 6% was commical to convince people to contribute to a 401K lol, the last year I was tracking a -7% ROR and without the company matching I would have been throwing money in a burn barrel and that was with stable value investments (I guess when they say stable value they are not talking about gold lol). Also who lives to 75 yrs of age.... not many.

 

[cbg]

To avoid foreclosure, yes. To pay off student loans, no.

 

[HappyWanderer]

Wait to 2010 as the amount of income to prevent the rollover is greatly increased.

 

[anteater]

I read the article and hardship does apply to being unemployed and out of options (loans, avoidance of forclosure, etc). Also I thought the assumed ROR of 6% was commical to convince people to contribute to a 401K lol, the last year I was tracking a -7% ROR and without the company matching I would have been throwing money in a burn barrel and that was with stable value investments (I guess when they say stable value they are not talking about gold lol). Also who lives to 75 yrs of age.... not many.

If your frame of reference is one year, you need to get a new frame of reference. On an historical basis, a 6% average annual return is reasonable, even a bit conservative, for a decently allocated portfolio.

Hate to tell you this, but 75 is about the average life expectancy now.

 

[cbg]

My foster mother is 82. My father will celebrate his 78th birthday in two weeks. My grandfather lived to be 87, and my grandmother to 84. My husband's grandfather was well over 90 when he died. Sorry, pal, but plenty of people live to be over 75.

And once again, arguing with us about what the law ought to allow is not productive. We don't write the laws. Take it up with your elected representatives.

 

[rppearso]

I am not trying to argue I am just trying to get facts straight becuase some people will make blanket statements like no way no how and then after someone else brings it up (like foreclosure avoidance) they will say oh yea that qualifies, I am just trying to pick everyones brain to get a full picture. During a lay off forclosure could come pretty quick.

My frame of reference may be unique but I am trying to get in a very good financial situation so I can buy a red bull air race plane (extra 300) and be able to perform and still qualifiy for a class 3 medical, im less concerned about being 80 and playing cards at the legion. If circumstances do not allow me to get the plane while I can qualify for a class 3 then I will probably fly without one and just not be competitive and stay away from areas of high FAA activity or find a doctor that will sign me off.

 

[cbg]

You read the article. It tells you exactly what does and does not qualify. Nowhere does it say that you can get a hardship withdrawal to pay off student loans. And you can't. No way, no how. I've administered 401k plans for a number of years. I'm not just talking to hear myself talk.

The plane is just going to have to wait.

 

[rppearso]

Yep I got the link so I now have to check with my employer to see if there is a clause for hardship withdrawl. I can keep an additional 200$ a month by not contributing so I will be able to pay off debt that much faster so if im laid off I am not defaulting on loans that fall back onto my parents now that the company matching is suspect. Thank you for the help.

 

[ecmst12]

Who wants to take bets that when OP is eating cat food in his 70's, he'll want to know why someone didn't stop him from spending his 401k?

Also, if you become unemployed, you can get your student loans put on deferrment. That means no payments or interest. So they won't go into default.

 

[rppearso]

Who wants to take bets that when OP is eating cat food in his 70's, he'll want to know why someone didn't stop him from spending his 401k?

Also, if you become unemployed, you can get your student loans put on deferrment. That means no payments or interest. So they won't go into default.

Actually they will only defer the federal student loans, the state loans go to interest only payments which is still over 100$ a month which is alot of money when you have no job and its pissing money out the window and only for so long if you go beyond 6 months you will go into default, like I said had I been laid off in may which was a close call I would still be unemployed right now as I have been looking hard for a new job because who wants to be somewhere where you are hanging by a thread so that means that I would have been unemployed for 7 months at this point with no call backs or interviews let alone job offers as of yet or in the foreseeable future. Plus the 300 lb gorrila in the room would be the mortgage that would go into default almost immediatly since between the mortgage and condo dues its like 1700$ a month. Thats just the way it is, im not sure why there are individuals on this forum that are like vicious wolves, I figured they were only in certian sub forums but they are all over in here.

 

[ecmst12]

I only have federal student loans, so I didn't know about the state loans.

You can stop contributing to the 401k at the next enrollment cycle. Depending on the plan, that could be monthly, quarterly, or yearly. Ask HR when the next time you can disenroll is. You don't need to leave the company to change your enrollment for FUTURE contributions. You just can't get to whatever's in the account NOW. And seriously, you ARE going to need that money when you retire, so try to think of the big picture.

I used to work for a Medicare supplement insurance policy. As part of our training, we learned that the average 65-year-old is expected to live about 15 years more. The general life expectancy may be 70-75, but that includes infant mortality, people who die from cancer or car accidents in their 20s or 30s or 40s, etc. If you make it to retirement age, the odds are on your side that you will make it a fair bit longer. Social security barely supports people now, and it might not even still exist by the time people in their 20s and 30s now, retire. I know you are worried about your credit rating, which is understandable, but money in your 401k is otherwise untouchable by creditors - it is protected from lawsuits and other means of collection, EVEN for student loans. It's a safety net you can maintain even if you end up in bankruptcy.

 

[rppearso]

I only have federal student loans, so I didn't know about the state loans.

You can stop contributing to the 401k at the next enrollment cycle. Depending on the plan, that could be monthly, quarterly, or yearly. Ask HR when the next time you can disenroll is. You don't need to leave the company to change your enrollment for FUTURE contributions. You just can't get to whatever's in the account NOW. And seriously, you ARE going to need that money when you retire, so try to think of the big picture.

I used to work for a Medicare supplement insurance policy. As part of our training, we learned that the average 65-year-old is expected to live about 15 years more. The general life expectancy may be 70-75, but that includes infant mortality, people who die from cancer or car accidents in their 20s or 30s or 40s, etc. If you make it to retirement age, the odds are on your side that you will make it a fair bit longer. Social security barely supports people now, and it might not even still exist by the time people in their 20s and 30s now, retire. I know you are worried about your credit rating, which is understandable, but money in your 401k is otherwise untouchable by creditors - it is protected from lawsuits and other means of collection, EVEN for student loans. It's a safety net you can maintain even if you end up in bankruptcy.

Thats true, and I could forclose on my condo and declair bankrupcy if it turns out im upside down but the problem with the student loans is my parents are co signers so as soon as it went into default they would be hooked up for the payments and they are poorer than I am. I am still employed now so I am making massive balloon payments to my student loans because saving the money to hang on to my condo for a few extra months at the cost of keeping my parents hooked up is not worth it since if I were to be laid off it would be very long term and the condo would go into forclosure anyways. You are correct I dont want to dip into my existing 401K but I need to pay the state loans off and 200$ a month extra since its questionable if the company is even going to match anymore might be a good idea.

Once things pick up and I am getting multipule job offers for more money and better benifits I will start putting money back in but right now I am worried about keeping my parents out of my problems and keeping a roof over my head so as soon as the state loans are paid the mortgage is next. Once I am at a point where dieing on the streets or living in my parents basement is out of the picture I will start investing much more aggressivly. My parents are not hooked up for the federal loans so I am not worried about thoes and the interest rates are around 2%. I have 2 more pay checks where I get 3% matching after that I have to discontinue payments to the 401K.