No. of Recommendations: 1
Assuming you are over age 59-1/2, once you leave the company you should be able to take the $20K directly from your 401K or your IRA without paying the penalty but with paying income taxes. You will only pay income taxes on the money you take out of the plans. So a rollover to an IRA for the rest of the funds will save you income taxes on them.

Note that your tax rate next year could be quite high from the time you have worked. If you waited to pay off the mortage until the next tax year, your income that year could be a lot lower so maybe your tax rate would be lower too. Check it out before you decide.
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