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Author: fehorse4 Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 294  
Subject: Cash out 403b to pay debt Date: 1/29/2009 9:46 AM
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I have a question about using my 403b to pay off debt.
I have, unfortunately, about $70k of credit card debt left, which I have been steadily paying down. I currently pay about $800 a month in finance charges on the debt and pay about $2800 each month .
I am 59 and 3 months of age. My wife is 62. I earn 170k a year and have (after the crash) about 270k in a company 403b and my own IRA from a rollover from a previous job. My wife brings home $2600 a month after taxes.
My question is this; does it make sense to withdraw funds from my retirement account to pay off the debt, then increase my monthly contribution by the same amount ($2800) to save the finance charges? I calculate I could then pay back the amount in about two years. This would free up the $2800/month and with retirement payments from my wife's job and SS, more than compensate for the drop in her income and allow her to retire in 2 years.
I think there is a way to withdraw funds from the 403B before age 59 1/2 or I could wait a few months.
I can pay back into my 403B by maximizing my contribution or by paying it in post tax dollars into my IRA at TD Ameritrade and taking a tax deduction.
Will the taxes on the withdrawal cancel out any savings I get from the cancelled debt?
It seems to me that my funds are not earning a heck of alot right now sitting in my 403B.
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