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I have a pension in a state system, from which I separate 3.5 years ago. It's unlikely that I will return to work for that system and am considering rolling the amount in my public employee pension program into my self-managed 401k program. The receiving 401k is an "eligible" employer plan, so that's not a problem.

The question I have is sort of two fold: Whether it's a good idea to take the small amount of money (in this case, just $17,000) and add it to my current pension fund -- or to leave the state pension in place, where it's managed by the state retirement investment people? If it were a couple hundred thousand I'd leave it there, but I seem to be much better at managing my 401k than they have been with my state pension.

The second question is whether anyone can imagine a scenario in which I take a cash distribution of the state pension, using the bulk (after withholding and penalty) to pay off a major debt? Is that stupid to cash out a small pension for this purpose? Would it be possible to roll it over, and then take it out of my 401k as a loan?

Thanks for your help. I'm not looking for judgments on my lifestyle or why I'm thinking about it. I'm trying to be creative in thinking about reducing debts (mostly student loans that cannot be reconsolidated).

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