National Debt Relief Imparts Simple Truths About Using 401(k) in Debt Payment

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National Debt Relief publishes an article to educate debt-ridden Americans about using their 401(k) as a debt payment fund.

NationalDebtRelief.com

While the 401(k) is technically owned by the consumer, there are certain rules that has to be followed and sanctions to be implemented when the funds are used before retirement.

Staying true to their debt education advocacy, leading debt settlement company National Debt Relief, publishes an article that aims to inform consumers about the effects of using their 401(k) as debt payment fund.

Published on May 12, 2013, the article asked the question “Should You Take Money Out Of Your 401(k) To Pay Off Debts?”

With a lengthy tenure in the debt relief industry, National Debt Relief understands how people in debt want to get out of it as fast as possible. This is why having a lot of credit obligations and a huge sum of money sitting on a 401(k) can be quite a temptation to use.

While the 401(k) is technically owned by the consumer, there are certain rules that has to be followed and sanctions to be implemented when the funds are used before retirement.

The article explains that when the funds are withdrawn, the amount will be taxed by the government - at least when the consumer is not qualified under the “hardship exception.” This means the consumer has given proof that the money will be used for immediate medical expenses, buying and paying for a home, education, etc. If not qualified, the consumer will be taxed (around 35%) and they will be asked to pay a 10% withdrawal penalty.

The article suggests that if the need to get funds from the 401(k) is unavoidable, the consumer should “loan” the funds instead of withdrawing it. This will force the consumer to return the money with interest. While the interest may be discouraging, the article reminds the readers that they will benefit from it. The interest will be added to their retirement plan and they will enjoy that as soon as they stop working.

The article cautions the readers to consider carefully before using their 401(k) because while they will not feel the effects at present, it will be felt when they retire. It is a more scary time to feel the effects because by then, the consumer may be faced with medical problems that require funding and they will not be physically able to earn money.

National Debt Relief published this article to impart knowledge about the implications of using the 401(k) for debt payments. As much as possible, the stand of the company is to leave the funds untouched.

Recently hailed as the top debt settlement company by both Toptenreviews.com and Topconsumerreviews.com, National Debt Relief continues to share their expertise in various debt related topics. While some instances could justify the use of the 401(k) in paying off debt, the company believes that there are other options to explore that could end up giving better results.

Debt settlement is the primary service offered by the company and they make no qualms about promoting it in this article. Getting funds from the 401(k) is just like robbing from the future. That does not have to happen with debt settlement. More than that, debt reduction is more likely to happen. In two to four years, the consumer will find debt freedom - without compromising their retirement fund.

To read the whole article and find more information about debt relief options, visit the National Debt Relief website or call 888-701-3260.

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Paul Ritz
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