My husband has a 401k from his previous job which is worth about $13,000. He wants to take it out and use it. His new job has a 401k option that he has not looked into yet. I was wondering if we did take it out (which would be about $4100 in penalties and taxes, I think) and opened an IRA in the amount of $5000(minimal) if that'd benefit us at tax time and we would still have the $3000.
Also, we make way less than the $60000 cut off. So, it appears it should be fully tax deductible. Is this true or am I just imagining how I think it would work?
My first answer to him using the 401k was a flat 'No.' However, it seems like the more I look into it, even though it's less than half in what was paid in, it looks feasible and without too many negatives. Am I completely misinterpreting the tax/401k jargon?
Oh and just in case the right answer is to roll it into a new 401k employer benefit, which is probably a 457 deferred compensation plan (he's now a county employee), how do loans against it typically work? E.g the repayment time, payment amounts, and interest rates?