Retirement account shows three balances; health reimbursement arrangement, 403 (b) and employer contribution account.

if cashed out do you get all three of those balances or is the person who holds the account only entitled to one or two of them?

Well aware of the tax penalties and affects it has on income taxes.

Edited for clarity's sake.

Her contributions to the 403b for sure. Employer contributions will depend on the vesting schedule of the plan.

You do realize that you will pay income taxes and early withdrawal penalty on the cashed out funds, right?

Your wife doesn't need a new car, she wants a new car. Going down to one income, and you're thinking about buying a new car, and you don't even have cash for a down payment.

My wife drives a 10 year old Honda CRV that has a book value of $7k. I keep it clean, and maintained, so it has no issues. We also have a baby that is a couple months old, and I don't feel that he's in danger for being in a $7k car.

Find your wife a used CRV, they're quite reliable.

Or, take an early withdrawal penalty, plus your tax rate, to buy a depreciating vehicle.

Maybe I didn't make my question clear and left it open when I said "any guidance".  My bad. If you don't have the answers to the sentence ending in a question mark then your life coach advice is not what I'm looking for, Dave Ramsey.
It's her retirement money and she can do what she wants with it. Both of us would prefer her to be driving around in a more reliable vehicle than one that is no longer made, who's manufacturer went under and has 200k miles on it.
Try pretending you don't know every facet of our financial situation.

^^^ truth.

we're tracking on the withdrawal penalty and all that jazz...

you will loose 50% of that money at least to tax and penalty
I will just say it's a bad idea to withdrawl it. as I don't want the ass chewing the other guy got.

she will get her contribution, minus about 50% tax and penality
most likely the medical reimbursment she will not get
employer match will depend on vesting (how long she's worked there) and minus about 50% tax and penalty

the terms and conditions of your wife's access to monies in those accounts upon her resignation can not be fully and accurately determined by ARFCOM.

her employer has a set of plan documents for each of those accounts, and you have to read them carefully to understand what you are getting and what you are forfeiting.
moreover, beyond her employer is the federal and state governments, each of which will have a say on the tax and early withdrawal penalties associated with those accounts.

in your shoes...
i would first work on rolling over as much of her retirement money as possible into one or more IRA's; Vanguard, Fidelity, or TR Price can do a "pull" and seamlessly roll that money over.
i say "one or more" IRA's because in the event that she has both pre-tax and after-tax contributions into a qualified retirement plan they will have to be handled separately.  
this could, for example, result in her having a Trad IRA *and* a Roth IRA.

now that you have the money in an IRA (or more than one) you can best determine, on your own time, how to optimize use of that money.  
examples: withdraw nothing, withdraw post-tax contributions, withdraw pre-tax contributions, withdraw everything, etc etc etc

i encourage you to consider very carefully the potential long term effects of spending tax-deferred retirement money on a depreciating asset.
you can't get that investment time back.  

ar-jedi

Thank you. I appreciate the explanation. I'll have her dig that stuff up and take a look at it and go from there.

OP,

Not here to judge your decision on cashing out retirement, that is your decision alone.

But if you are going to do that and buy a vehicle, get a used one that has gone through depreciation already, been mechanically taken care of that has good part support for years to come (domestic, my 2006 Suzuki arieo had shit for parts availability) and drive it till the wheels fall off so this doesn't happen a second time.

My wife got rid of her VW Jetta diesel car because the maintenance was killing us, expensive sensors and parts every two months, we got her in a Ford Edge with 96k miles on it and 2 and a half years later it's still running strong and is almost paid for.

Do whatever the fuck you want but if you can't afford life now without raiding your retirement what are your plans when you get old and can't work anymore?

Think about that. You work now and have income and it seems to be not enough so you want more.

I would cut off a finger before I raided my retirement because I am counting on it to provide for me when I am old and can not longer earn a paycheck.

Can you takeep a loan out of it, instead of withdrawal?

Pay 25% tax to borrow your own money, then once you repay it, pay tax on it again in retirement.

You don't pay a tax when you borrow against your retirement, at least not at Fidelity.  You take a loan out, pay yourself back 4%.  You didn't take a withdrawal, so there's no tax penalty.

Ive borrowed from mine many times for years with different companies.  No tax.  Its all defined by the irs

Yup, I'm 5 months into a 15 year home-loan against mine. I'm paying 1.8% interest on it. The money was put into the account for the specific purpose of sheltering it from taxes in high-income years then using it to buy a home/property. This way I get to use pre-tax dollars that I earned, and I'm borrowing from myself, and paying the interest back to myself. My account still has a large majority of it's balance in stock-market holdings, but a portion in "cash holdings" in the form of my loan.

Purchasing a home is an exception I believe.


But isn't the money you and your employer contribute to a 401k, pre-tax dollars?

And now you pay it back with post-tax dollars, plus interest, plus tax again when you retire and take distributions?

Yes the laon payment is post tax on my check. Technically the interest is no different than increasing my contribution.  But I didn't need to take an $18,000 withdrawal to get the $10,000 I actually needed.

I'll be surprised if the retirement accounts will even still have money in them in the next 25 years to be honest.

I can take 2 types of loan from mine, can even have them at the same time. Home loan is up to $50k, general purpose loan (can be used for ANYTHING I want) is up to $10k.

What is your point about using post-tax money to repay it. You use post-tax dollars to repay money to the bank when you take a loan don't you?

The only money that gets taxed twice is the interest money, once upon earning it then subsequently paying it into the account, then again at final disbursement during retirement. My tax savings have far exceeded that amount by contributing money that I wished to put aside for the purchase of a home into my 401k with the express intent of borrowing it back out.

ARF Derp thread of the day....

Because your dollars that went into the account were pre-tax, allowing you to buy more shares of a fund, and letting the money compound?

Are you really comparing a loan from the bank vs a loan from a 401k, for a car?

I'm still not seeing your point here. You need to do some very basic google searching if you believe that you're paying more income tax by taking a loan from your 401k. It's a myth that many non-financially-savvy individuals perpetuate because they can't wrap their mind around it. IF you ARE savvy then you need to run a balance sheet on the 3 main scenarios, #1 Contributing to 401k for the purpose of borrowing the money later (that ignore tax incentives of lowering your MAGI during the contribution year as I did), #2 Getting a loan from a bank, #3 Borrowing from your 401k even if you didn't contribute for the purpose of taking a loan. You will be surprised at the results. Just in case you're too lazy to google or run a balance sheet I'll just point you to this well-written explanation from Vanguard: Do 401k loans really get taxed twice?

I absolutely am! What is the difference? You're taking a risk that whatever funds your 401k would have been invested in during the period that you have the loan will not outpace the interest rate that you're paying. If they do, you miss out on those extra gains. Even if the market gains outpace the interest you have to factor in the savings (you paying interest to a 3rd party instead of yourself), and the tax benefits (sheltering income from taxes or reducing MAGI to qualify for certain credits/breaks etc). If the gains don't outpace your interest rate, then it's win-win for you!

You're right, you've figured it all out.

So financially savvy that you're broke and need to borrow from your 401k.

Actually, financially savvy enough that I put money into my 401k with the specific purpose of decreasing my MAGI in the years I was making $140k+ working overseas, so that I could borrow it back out. I borrowed it out to decrease the principal on the mortgage for my second home... the one appraised over half a million...

You can call it stupid all you want... borrowing from a 401k doesn't match well with everybody's situation. Just like choosing not to borrow from it doesn't match everybody's situation. You apparently fail to understand that very basic principal. If you wish you question my financial decision go right ahead, but I'm secure and confident in my financial well-being. I don't know many other 30 year olds that went from growing up dirt-poor to having over $1M in assets by age 30; I bet you don't know many either....

The only other one that I know of personally is my little brother, and he followed closely in my foot-steps; he's busted his butt and made sound financial decisions, and made significant investments at an early age to get where he is... I guess it runs in the family!

ETA, FWIW, I would NEVER condone tapping into any retirement for vehicle purposes as the OP wants to do. My argument is based purely on the principal of using 401k loans when they make sense. I drive a 20 y.o. gas-sipper as my daily driver, I maintain it well, and it has nearly a 1/4 Million miles on it. I plan to keep it at least another 50k miles...

Meh It's the wife's retirement, and we've since revisited the issue and decided to leave it alone and simply switch vehicles at the moment. I do appreciate the input from everyone, even if some of you took a minute to lecture about life choices instead of just answering the question. I know it's hard to avoid jumping on a soap box.