What to do about 401K's & property

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I am concerned about our 401K, it is full vested and most of the money is in the stock market. How do we get our money out? My husband says that unless we are buying a house or putting a child through college, we can't get the money out. Do they need paperwork to support this? What has anyone else done?

We own a condo that is currently rented out and is rental property, how can we sell that and stash the money without incurring a huge tax liability. We've been told by our CPA that we need to live in it for two years before selling it. We can't possibly do that. I'm concerned that the tenants won't be able to pay the rent. Any ideas?

We are here in Escondido, Ca. If there is anyone else on the board who would like to get together in our area and plan etc. I'd be open to that.

Thanks for any advice that is forthcoming. Our family is praying for the best and planning for one year of very hard times.

Blessings, Candice

-- Candice Brinkman (Cansas@aol.com), May 06, 1998


Candice, With regard to your 401(k), there may be some things you can do short of taking the money out of the plan. For example, many 401(k) plans offer the employee a variety of investment choices, with the right periodically to move from one investment fund to another. It is quite possible that your 401(k) allows money to be moved out of a stock market fund and into a money market fund. If you feel that there will be a big drop in the stock market, you may feel somewhat better if the investment is in a money market fund not subject to stock market dips. Admittedly, if you believe that the entire financial system will collapse, you may not be happy to have it in a money market fund, but it would certainly reduce the risk considerably. Alternatively, there may be a fund that invests in government bonds, which is less risky than the stock market, although you may not feel that it is zero risk.

With regard to your condo, if you sell it the tax should be not more than 28% on the gain (the difference between your cost basis and the net selling price). Figure out the amount before you make a hasty judgment that this is a huge tax liability. Think about whether you would rather pay the tax and have the equity free and clear, as opposed to owning a property that would hugely diminish in value (possibly by much more than 28%) if there are no tenants able to pay the current rent after January 2000. Alternatively, you could sell your current home (tax free probably), then terminate your tenant's lease when it expires and move into the

-- Dan Hunt (dhunt@hostscorp.com), May 06, 1998.

What you do with the 401K should depend upon what you believe will happen between now and 6/1/2001.

If you do not believe that civilization will vanish, then the advice in the first response in on the mark.

If you do believe that civilization will vanish then it would be prudent to get as much of the money out as possible. The only way that I know of to do that is to quit the job at the employer with the 401k and request all of it in a lump sum as soon as possible (which may be a long time from now, depending upon the terms of the 401k). In this case they will probably withhold at least 20%, but 80% of something is *much* better than 100% of nothing. If the 401k holder is over 59 and 1/2, I think the rules are slightly different, but that should be inconsequential.

-- George Valentine (GeorgeValentine@usa.net), May 06, 1998.

If you can move it out of one fund and into another there are some choices you can make. You might try a precious metals fund, or the Prudent Bear Fund. Try to find somehting that invests entirely in precious metals. If the markets don't simply collapse, you may be OK GK

-- Glenna Kamoroff (kamoroff@hotmail.com), May 06, 1998.

If your 401K is like mine, you can "borrow" 1/2 of the full amount from yourself (to get that money now), and then you "repay yourself with interest" by your employer deducting payments from each paycheck. Basically, this can provide money now that you might want to use for such activities as putting a down payment on some rural property, or buying long-term food supplies, or whatever. You will be making large payments back into the fund however (at least until January 1st, 2000 - assuming you take that long to repay the "loan".

-- Dennis Warren (dennisw02@sprynet.com), May 06, 1998.

If we believe the accurate prophet, Jonathan Hanson, then there will be a crash of the stock market. Jonathan predicted the Kobe earthquake and the financial problems in Asia. God has also told him that there will be a financial collapse in both Asia and the United States. God also told him to expect terrorist attacks in the US soon and a major earthquake in the Northwest with volcano's erupting. The Bible tells us to listen to prophets that are accurate even if we do not like what they say. For more information go to http://www.prophecyclub.com

-- Del Ball (dball@sales-tools.com), May 08, 1998.

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