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I've been crunching hard numbers last night. The original numbers were off. I didn't have the statements in front of me when I wrote the first post, so I had given them my best guess.

Since them I pulled the statements and check the numbers. Here they are as of today:

401K = $122K consisting of 3 pots of money...
I&I = 34K
Matching 401K = $35K
Deferred 401K = $53K
There is a $29K loan against the $122K 401K
ESOP = $138K
Total Nest Egg = $260K

I am paying $714 a month on the $29K loan.

TMF_Pixy on the retirement board provided some very helpful information for anyone considering doing what I need to do. Not only will I be penalized 10% for tapping tax-deferred money early, but I will not be able to recover as soon as I had hoped.

First I must borrow as much as I can ($50K). This would push my montly payment to $1155/month. Very tough to handle, but I think I can manage if I give up contributions (which I will forced to anyways).

Second, I would be prohibited from making contributions for a year.

Third, after a year, I would be severely restricted on how much I can contribute. This means... no free money. Ouch!

So.... after running the numbers, this is the only way it could work.

(1)Borrow $21K from 401K... loan becomes = $50K
(2)Take $22K from 401K. Keep $11K, pay $11K in taxes & penalties. This is to keep the loan at or under 50% of the 401K.
(3)Take $56K from ESOP. Keep $28K, pay $28K in taxes & penalties.

The loan payments would jump from $714 to $1155 a month.

The 401K would have $100K left (half in loans, have in funds). The ESOP would have $82K left. The nest egg would be worth only $182K, a $78K loss.

So turning 35 years old (July) I would have a $182K nest egg, $50K in debt for 5 years costing me $1155 a month. No bancruptcy, just severe delinquency for 1998. After July 2003 I can be a debt free 40 year old man with a net worth of about $250K or more, not where I had planned to be, but not destolute either.

Now I need to crunch my monthly budget to find an extra $441 a month to meet the new payment schedule. No contributions gives me about $170 towards the payments.

Of course all of this would unravel if my landlord decides not to re-new the lease in December. That is a chance I'll have to take.

This also assumes that the benifits adminstrator agrees with me. They could deny my plan.

Does anyone out there find fault with my numbers? I would appreciate feedback. Thanks!
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