Thinking of withdrawing from retirement to pay debt? - Ahwatukee Foothills News: Money

default avatar
Welcome to the site! Login or Signup below.
|
||
Logout|My Dashboard

Thinking of withdrawing from retirement to pay debt?

Print
Font Size:
Default font size
Larger font size

Denise Aguilar

Related Stories

Posted: Friday, April 6, 2012 9:07 pm

It is a common occurrence for people to come to me for a bankruptcy consultation after having cashed out their entire retirement savings in order to pay bills, only to find that a bankruptcy is necessary anyway. Hindsight is 20/20, as they say. Most of those in that position wish they had left their retirement funds in tact and filed for bankruptcy earlier on.

It’s not to say that using retirement savings to pay off debt is always a bad decision, but many times it is a futile attempt. Not to mention there are heavy tax consequences for doing so in most cases.

There are penalties for early withdrawal of the funds in the retirement plan, and if the debt which is being paid is settled for less than full, the amount written off may be considered taxable income to the person paying.

It is important to understand that retirement plans, whether pension, IRA, 401(k), or other like plan, are 100 percent protected from being taken in a bankruptcy.

Because of that protection, it makes sense to evaluate all options with regard to dealing with debt before taking action. It is possible that the benefit of the bankruptcy discharge, plus keeping savings in tact outweighs the detriment to the credit score.

In order to make that evaluation, I recommend consulting with an experienced bankruptcy attorney, financial planner, or accountant. Becoming informed about your options before making a decision on such an important topic is the only way you will not suffer the “I wish I had” syndrome.

• Denise K. Aguilar is an Ahwatukee attorney whose bankruptcy practice focuses on consumer and small business bankruptcy. Reached her at (480) 455-1881 or visit www.aguilarlawonline.com.

More about

More about

More about

  • Discuss

In historic first, Arizizona Republic backs a Democrat for president, citing Trump’s ‘deep character flaws’

In 1890, when the Arizona Republic first started printing from Phoenix, before it published photographs or crossword puzzles or won a Pulitzer…

Published: September 28, 2016 - 5:50 am @ https://www.washingtonpost.com/news/morning-mix/wp…

Futures Fail To Rebound As Deutsche Bank Tries To Comfort Markets That It Is "Fine"

After yesterday's broad "Hillary rally" gains in the US, overnight's session has seen more risk-on sentiment as European stocks advanced, igno…

Published: September 28, 2016 - 4:49 am @ http://www.zerohedge.com/news/2016-09-28/futures-f…

I’m Giving a Talk on the Blockchain, Bitcoin, Ethereum and Steemit at the Famous Pubcon Conference in Las Vegas, Nevada, USA

I’m speaking at a famous conference called PubCon in fabulous Las Vegas, Nevada next month. I want to give the best talk about blockchains and…

Published: September 28, 2016 - 4:20 am @ https://bryangmyrek.com/2016/09/27/im-giving-a-tal…

Germany Working On Deutsche Bank Rescue Plan As Lender Sells Unit To Shore Up Liquidity

by Tyler Durden Sep 28, 2016 6:15 AM Update: In an emailed statement, the German finance ministry told Bloomberg that the report on Deutsche B…

Published: September 28, 2016 - 4:19 am @ http://www.zerohedge.com/news/2016-09-28/germany-w…

The Duke: Where John Wayne stayed in Arizona

Many locations around Arizona claim a connection to John Wayne. Hollywood’s brightest stars came to Arizona for work or to escape the spotligh…

Published: September 28, 2016 - 3:49 am @ http://www.12news.com/entertainment/television/pro…

AP: Across US, police officers abuse confidential databases

DENVER (AP) — Police officers across the country misuse confidential law enforcement databases to get information on romantic partners, busine…

Published: September 28, 2016 - 3:19 am @ http://bigstory.ap.org/article/699236946e3140659ff…

Pre-applications soon accepted for section 8 housing in Mesa

MESA, AZ - Pre-applications for the Housing Choice Voucher Program (section 8) will soon be accepted for those seeking assistance in Mesa.  Pr…

Published: September 28, 2016 - 3:19 am @ http://www.abc15.com/news/region-southeast-valley/…

FTSE 100 rebounds after Deutsche Bank's Cryan says state aid request 'out of question'

The German government and financial authorities are preparing a rescue plan for Deutsche Bank in case the lender would be unable to raise capi…

Published: September 28, 2016 - 2:18 am @ http://www.telegraph.co.uk/business/2016/09/28/fts…

AP: Across US, police officers abuse confidential databases

DENVER (AP) — Police officers across the country misuse confidential law enforcement databases to get information on romantic partners, busine…

Published: September 28, 2016 - 12:17 am @ http://www.ktvu.com/news/208250065-story

The battle for Maricopa County, AZ, where Latino voters could hold the reins to the state

Maricopa County, Arizona, has voted Republican in every presidential election since 1948. Bill Clinton won the state in 1996 and still lost th…

Published: September 27, 2016 - 11:56 pm @ http://www.dailykos.com/story/2016/9/27/1574611/-T…

Facebook

ahwatukee.com on Facebook

Twitter

ahwatukee.com on Twitter

RSS

Subscribe to ahwatukee.com via RSS

RSS Feeds

Spacer4px

Most Popular

Online poll

Loading…