Settlement-retirement acct?
Date: Thu, 07/29/2010 - 18:14
So, I don't have much in retirement unfortunately. Probably just enough to pay this settlement. Would it make any sense at all to use it to pay the settlement? Or would it not even be a good deal if I got 30% then had to pay the taxes on the retirement money?
What do you think??
Well that's a really loaded question. but if you work the numb
Well that's a really loaded question. but if you work the numbers. The taxes would be your tax rate plus 10% penalty. So if you took $2000 out then your tax refund next year your tax refund would be about $500 smaller (typical 15% income tax + 10% penalty). To figure out your tax bracket, pull out your tax return and take amount of tax owed divided by your income. Only about 2% of Americans pay 30% federal income tax so you are most likely in 15% or less.
So basically you would pay $2600 ($2100 settlement plus $500 tax on retirement) to settle an account that's about $6500. Still not bad by my calculation.
Greetings Jill Adams, Others may differ but freedom from debt
Greetings Jill Adams,
Others may differ but freedom from debt is your ultimate goal.
My 2 cents, go for it.
Regards,
King "Kash" Jabba Labba