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Greetings, TopDawgDC, and welcome.

<<Okay, a little background. I'm 31, on my third job that offers a 401K and trying to decide what to do with old plan money.

My first job (Uncle Sam) doesn't care if I ever roll my 401K money over into another plan and since it's earning BIG rates of return, I'm leaving it right where it is.... my last job, however, has given me about 70 more days to take my money and move it somewhere. There is only about 1,000 to 1,500 in this particular 401K as I was only eligible for a very short time prior to leaving.

My question: Should I roll this money over to my new company's 401K (I'm contributing 12% here) or should I take the money and pay-off a credit card? I've got a good base in the government 401K and am putting a lot in here, so I'm wondering if I shouldn't get rid of some of the bills. What are the impacts on my income taxes, other penalties?>>

I'm all for paying down debt, but using your old 401k to do so will cost you ordinary income taxes plus a 10% penalty before you can pay the first nickle on that debt. Say you've got just $1K to use. In the 28% bracket you'll pay $280 in ordinary income taxes plus whatever state (or DC) taxes might be involved. Add another $100 for the penalty, and you've lost over $380 when the state's bite is thrown into the mix. In this case, you're better off moving the money into an IRA or your new employer's plan.

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