I would like to begin investing, without the short term liability's hanging around my neck (aka: credit cards, loans) I would still have a nice chunk of change after the tax and 10% penalty hit. For investing in the long term, AND I would be able save, and pour money into the NEW401k plan.When investing for retirment, the compounding time is your biggest ally. The money you have contributed already has already been compounding. If you cash in, not only are you contributing about 35% (maybe more, depending on tax bracket) to Uncle Sam (federal and state taxes, plus 10% penalty), but you are also starting the clock all over on the compounding. Even if you reinvest every remaining penny, you will have taken a large chunk out of the earnings which can be compounding for you to give to the government.It's your money, but think long and hard about this. Personally, if I was in your position, I would roll it into an IRA and pay my debt using my current cash flow. But that's just me.foolazis
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