As part of my divorce settlement, I received a part of my ex's 401K. The paperwork took forever to go through, but it is finally ready.
My plan has always been to roll this money over into a Roth IRA. There are no fees or penalties with this option. I really didn't even consider anything else.
I also have the option to cash this out and get the money now. Doing this, I would lose 20% to tax/fees. I'm starting to lean in this direction. Even with the 20% hit, it is still a good chunk of money that I could REALLY use right now. It would pay off the debt I built up the past few years, give myself a respectable savings account (now I only have 1K), pay for some things we need around the house, my van desperately needs some repairs, my schooling (wouldn't have to take out student loans next year). Basically, just everything that I need but have been putting off b/c the money isn't there. Paying off the debt and paying a few bills in full for the year would also free up about $300 a month, which is HUGE for me right now!! (for those that don't know me, I'm not working (well, I do side things like babysitting for extra $). I'm a full time student and full time mom of four young kids. I've got 1 1/2 years before I have my teaching certificate, so I've been living off of child support and will continue to until then)
I am sooooo torn! I KNOW I should roll this money over, but it would relieve such a burden off my shoulders if I took the disbursement. I guess I'm just fighting short term versus long term. So, I've created a poll. Should I be fiscally responsible and roll this money over for my retirement? Or, should I take this money now, even with the tax hit, to relieve my financial burden? I would love to hear your opinions. What would you do, if you were in my shoes?