Noemail[at]blank.com wrote:
- quote -


I lost track of what you're doing but I think I have it now...you'd
rollover 10% of your ESOP to an IRA, then take an early distribution
from the IRA of an amount adequate to pay off the credit cards?

Forget that whole thing for a moment...there are some special tax rules
on ESOP stock that you can use when you (eventually) take a full
distribution, either at retirement or when you leave the job. You can
rollover to an IRA then, but it might not be the best move. The reason
is that taxes and penalties are based on the cost basis in your ESOP
stock, not the value at time of distribution. If your stock has very low
cost basis, you might want to make use of these rules when you leave the
company. So taking money out now could, in the long run, be a waste of a
big tax benefit that you're sitting on.

One comment on your basic question...if you have $900k in a 401k (or is
this all ESOP?) and are running up credit card debt, it's worth
revisiting your 401k contribution rate. There is a such thing as saving
too much for retirement. But that's a "going-forward" issue...you
typically end up paying so much tax on early 401k/IRA distributions that
they're an expensive source of cash. A cheaper solution may be to halt
all 401k contributions and pay off the debt. And of course, if you're
overspending your income, cut back on that.

-Tad

PS for info on ESOP tax rules google NET UNREALIZED APPRECIATION

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

<Noemail[at]blank.com> wrote in message
news:2sahs3l73osj2qo5djvcg0rcr0dm4idvm1[at]4ax.com...
- quote -

Well, it sounds to me like you simply want less of the debt you have so
that you can go into debt on something different. This doesn't make good
financial sense.

Elizabeth Richardson

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Noemail[at]blank.com wrote:


- quote -

$900k will provide about $36K per year (given the 4% rule we discuss
here). I trust that's just 'your' account? In which case you may be on
track for a good level of replacement income.
JOE

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

On Fri, 29 Feb 2008 14:55:14 -0600, Tad Borek <borekfm[at]pacbell.netwrote:

- quote -

Why would that be a better deal than sheltering the distribution and
taking the tax hit?

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

On Fri, 29 Feb 2008 15:07:07 -0600, "Elizabeth Richardson"
<erichktn[at]worldnet.att.net> wrote:


- quote -

Well, we have 2 car payments and a mortgage and the wife also has CC
debt (not as much as myself though; about $6000.00) plus we like to do
things in our lives that cost money (Vacations entertainment etc). But
I understand about living within our means though--I just don't
practice what other's preach though<g> .

I should have also stated initially that we have been married for
less than a year now so there is a period of adjustment one goes
through when combining incomes. As she earns more than I do, it's kind
of a balancing act when it comes to our individual debt from before we
were married. We do split all joint bills though, but the CC debt from
our former single lives should be our own responsibilty and I don't
really think it's fair for her to pay my old debt; so that is why I
would like to get back on track.

But yeah, I realize it's probably a dumb thing to do but I like the
feeling of a clean slate debt wise. The trick is to not get back on
that merry-go-round once I get off of it (if I do decide to do it)

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

On Fri, 29 Feb 2008 12:58:18 -0600, Tad Borek <borekfm[at]pacbell.netwrote:

- quote -

The rules for this are fairly staight forward as many people in my
company have also done this so to answer your question yes I have
checked it out. What it is is called an "in service distribution"
where I can elect to withdraw 10% of my fund every 10 years. Plus at
55 I could (if I quit the company) start taking the rest of my money
out over a 3 year period and again roll it over to the IRA until I was
59.5.

Now I probably won't do that, but the point is I still will have
around $900k at that point so it's not like I'm cashing out my entire
retirement nest egg right now.

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

On Fri, 29 Feb 2008 13:04:43 -0600, "John A. Weeks III"
<john[at]johnweeks.com> wrote:


- quote -

I understand what your'e saying.

- quote -

Yes we're working on that but I have have taken a considerable pay cut
due to less overtime where I work during the past year and a half so I
get that, but both of us have car payments too (although none of our
CC cards are maxed out).
- quote -

Actually we have slacked off quite a bit and as a matter of fact have
just got our refund back today so most of that is going to pay down
some of that CC debt.


- quote -

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

On Feb 29, 11:04*am, "John A. Weeks III" <j...[at]johnweeks.com> wrote:
- quote -


That is one great advice. The reason for someone going into debt is
spending more than one makes. Don't make the mistake of compounding
one financial mistake with another by using that retirement money to
pay off debt.

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

kastnna <kastnna[at]auburnalum.org> wrote:


- quote -

It also assumes that they will not turn around and run up the credit cards
again. Most people do. -- Doug

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

<Noemail[at]blank.com> wrote in message
news:rt5gs3pe25nk9fdbbq99jkeddpg4lj57to[at]4ax.com...
- quote -

What is preventing you from making payments greater than $300 per month so
that you could pay this off quickly out of regular income?

Elizabeth Richardson

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

joetaxpayer wrote:
- quote -

Yeah the best thing to do may be to NOT rollover the assets to an IRA,
instead taking the distribution and paying the 10% penalty. For example,
if that amounts to a very tiny amount. In which case this becomes a
different question entirely..."I have 90k of stock with big gains and
credit card debt, what should I do?"

-Tad

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Noemail[at]blank.com wrote:
- quote -

I'll be sympathetic to the debt even at your income, but as others
stated, it's a budget issue, not an income problem.
Do not take IRA money to pay the cards. Your equity line should be less
than 6% or $65/mo interest. $271/mo pricipal will kill it over 4 yrs,
find the $10/day between you and the wife and pay it off over time. Then
don't run them up again. Note - don't cancel the cards, it will hurt
your credit score, but that's another thread.
(per Tad's note, be sure this doesn't have other tax issues or features,
that it's a pure rollover to the IRA)
JOE
www.blog.joetaxpayer.com

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

In article <rt5gs3pe25nk9fdbbq99jkeddpg4lj57to[at]4ax.com> ,
Noemail[at]blank.com wrote:

- quote -

Don't use retirement money to pay for credit cards. Retirement
money has fees, penalties, and high taxes when used before your
retire. That money is simply too expensive to use to pay debt.

As far as the $13K goes, just get with it and pay it off. You
make $100K for crying out loud, that is over $8000 a month. Save
up for 2 or 3 months and write a check for it. It isn't a family
pet, so don't keep feeding it.

The fact that you don't have the cash to pay this off tells me
that you have a spending problem. You have plenty of money with
with $100K coming in. You must be spending it like water. Maybe
you need to go on a money diet for 90 days. Slack off on the
spending, and maybe keep track of your $$$ for a while to see
where it is all going. Something that you are not totally aware
of is sucking your net worth down the terlit, and you need to give
it a swift kick in the assets.

-john-

--
================================================== ====================
John A. Weeks III 612-720-2854 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ====================

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Noemail[at]blank.com wrote:
- quote -

An ESOP distribution has special tax rules associated with it. Did you
clarify all that with your employer? Issues like cost basis, net
unrealized appreciation, etc.?

-Tad

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

On Feb 29, 9:51*am, Noem...[at]blank.com wrote:
- quote -

I fully respect the satisfied feeling of "being out of debt", but it's
not always the best thing to do. I get the impression that your brain
and your heart are conflicting on this decision. Please take a moment
to look at our outside points of view.

Assuming you are in the 25% tax bracket, you will need about $20k to
pay-off that $13k in credit card debt using your proposed method. That
stings. It will take a long time to put that back into your retirement
account. I don't consider this method as paying off debt, but rather
trading it for a larger debt in the future (by having $20k compounded
dollars less to retire on).

Another alternative: you can use your HEL which not only lowers the
interest rate paid on your debt but also makes that interest
deductible. Just as importantly, it leaves that $20k in your IRA to
grow at a rate that is hopefully higher than the interest rate you are
paying. The increased discretionary cash flow can be used to pay down
the HEL faster or to boost your savings. Either are viable options
dependent on your risk preferences. A drawback to this plan is that
the HEL is secured debt and failure to repay could result in
foreclosure. The probability of this occurring is unknown.

**All of the above assumes that your HEL has a favorable interest
rate, your tax scenario is as I assumed, and that you can earn a
positive net return on your investments. These assumptions may or may
not be accurate.

Good luck in your decision making.

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

Hello:

I am married, in my late 40's and own a house (combined income 100K)
so I have the usual tax deductions (we are DINK's).

I also have no financial "horse sense" so bear with me here.

I am about to receive around $90k from an in service distribution from
my ESOP (Same tax rules as a 401k plan or IRA with 10% penalty etc). I
have opened a Traditional IRA account at my bank to roll it over to.

I have $13000.00 in cc debt that I would like to pay off by
withdrawing this amount from my new account.

I understand that I would pay a 10% penalty plus the extra income tax
hit BUT once those cards are paid off my cash flow will increase by
$300.00 a month (since I wouldn't have cc payments anymore). I like
the idea of being out of debt so that is why this appeals to me even
though it doesn't seem to make much sense from a financial standpoint.

What would be a better way to handle the CC debt? Should I use my
equity line instead and avoid the early distribution and be able to
write off the interest? However I would still be stuck with monthly
payments.

Here are some additonal thoughts and theories:

I will be able to shelter some of this tax hit this year since I also
enrolled in a FSA account and maxed the contributions this year to
$3000.00 (yes I will be spending that on health care--I haven't been
to a dentist in 6 years ;-) plus other qualified expenses). so my AGI
will be reduced somewhat.

Would I be allowed to contribute $5000.00 into that IRA in 2008 and
write that off as well (thus reducing my AGI) or is that not allowed?
As I do work full time, in theory wouldn't this contribution be
considered valid for tax purposes as it is derived from earned income?

Or is my logic flawed here?

Thanks for any advice.

------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.