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

Scottsdale Fashion Square announces big renovation plans

Enhancements to Luxury Offerings Will Be First Phase; Louis Vuitton Announces Major Store Renovation in 2017   Macerich, one of the nation’s l…

Published: December 5, 2016 - 12:55 pm @ http://azbigmedia.com/azre-magazine/scottsdale-fas…

Phoenix Herpetological Society offers tours for holiday season

The Phoenix Herpetological Society is offering a unique way to celebrate the holiday season. Visitors to PHS’ reptile sanctuary can get up clo…

Published: December 5, 2016 - 12:56 pm @ http://www.scottsdaleindependent.com/news/phoenix-…

Traditional cities are having a big decade

Traditional American cities like Seattle, New Orleans, New York City, and Philadelphia are growing this decade at a rate that they haven’t see…

Published: December 5, 2016 - 12:30 pm @ https://www.cnu.org/publicsquare/2016/12/05/tradit…

Macerich announces mixed-use expansion at Scottsdale Fashion Square

Macerich, which is among the leading owners, operators and developers of one-of-a-kind retail properties in top markets, has announced a multi…

Published: December 5, 2016 - 12:31 pm @ http://www.scottsdaleindependent.com/business/mace…

2 medical marijuana users sue to force Arizona to reduce fees

PHOENIX — Claiming the state is hoarding funds, two medical marijuana users want a judge to reduce the annual charge for the registration card…

Published: December 5, 2016 - 12:26 pm @ http://tucson.com/news/local/govt-and-politics/med…

Stripes funds restaurant chain Snooze

Stripes Group has made an undisclosed investment in breakfast and brunch chain Snooze, an A.M. Eatery. In conjunction with the funding, Stripe…

Published: December 5, 2016 - 11:59 am @ https://www.pehub.com/2016/12/stripes-funds-restau…

No confetti, choirs as Kevin Johnson leaves Sacramento mayor’s post

Kevin Johnson rolled into Sacramento City Hall a superstar. A son of Oak Park, he was the first African American to serve as his hometown’s ma…

Published: December 5, 2016 - 11:58 am @ http://www.sacbee.com/news/local/news-columns-blog…

Scottsdale OKs major General Plan amendment in Desert Mountain community

Tucked away in the northernmost part of Scottsdale is a 92-acre plot of land city council has now approved for rezoning in order to make way f…

Published: December 5, 2016 - 12:01 pm @ http://www.scottsdaleindependent.com/news/scottsda…

Middle Eastern Bakery and Deli in Phoenix Vandalized, Community Rallies

Niki D'Andrea A A On Saturday, someone broke the front windows of the Middle Eastern Bakery and Deli on 16th Street in Central Phoenix. The mo…

Published: December 5, 2016 - 11:59 am @ http://www.phoenixnewtimes.com/restaurants/middle-…

10 iconic city skylines, then and now

Some of the world’s most iconic skylines are photographed so often that it's almost impossible to imagine them looking any different than they…

Published: December 5, 2016 - 12:00 pm @ http://www.mnn.com/money/green-workplace/stories/1…

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…