I’m focusing mostly on 401(k)s today in a technical sense, but the decision-making process holds for more or less all of them!Here’s the thing about all these plans: What goes in is not necessarily meant to come out. If you withdraw your money from a 401(k) plan before you’re 59 1/2 years old, except for certain particular “hardship” cases: Under almost any circumstance, you cannot cash out a 401(k) account when you still work for a particular employer.This is an option only when you’ve left a position, and there’s often a delay between when you quit and when the money is available to you, if you do choose this route. What we can do is share the thought process we use to make decisions – and you can think about what works for you.

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But if you want to know why I made the choice I did – and what we tell readers who ask us about this hot-button topic – read on!

In the United States, a 401(k) is a tax-deferred, employer-sponsored retirement plan.

That means that your employer takes money out of your check, before it’s taxed, and deposits it directly into a specific type of retirement investment account.

It’s got some cousins – 403(b) plans, IRAs, pensions – and all have different legal definitions and ways they can and can’t be used.

) I’ll share my exact dollar figures in just a few minutes – and explain why I was willing to take the 10 percent penalty. Here’s the question we ask our readers: If someone writes to us planning to take a cashout, the advice we give is to use ALL of it to attack debt.

Mostly, I want you to first know the basics of what we’re talking about. Not most, not as much as possible, but not a cent to anything else.

We’ll tell you this: Take a look at your Debt Tsunami, hit the debts that tick you off the most, or that free up the most cash in a month when they’re gone, and obliterate them.

When I shared my monthly financial update last week (Big Decisions Involving Big Dollars), I said I had big news: Among other changes, I’d decided to cash out my 401(k) from my former full-time job.

It wasn’t an easy decision to make, and it isn’t without some serious ramifications. Debt, it ranks among the most frequent decisions on which people seek our input: Should I cash out my retirement fund (or other savings vehicle) to pay down my debt?

So, since I now have first-hand experience doing so, I thought it made sense to talk in depth about this topic – and to share some thoughts I have.

Warning: If you’re expecting traditional financial advice, you might be disappointed.